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Why are demand and supply of interest to readers?

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vivian001 | Student, Undergraduate | eNoter

Posted November 4, 2010 at 3:26 AM via web

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Why are demand and supply of interest to readers?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted November 4, 2010 at 3:30 AM (Answer #1)

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Supply and demand should be of interest to any reader because they are the things that (in any market economy) set the prices of goods and services and determine how many of those goods and services will be sold.  So supply and demand essentially sets the price of everything you buy.

If you go further, there are such things as aggregate supply and demand -- these are for all goods and services in an economy put together (not just for one particular item).  This sort of supply and demand should be of interest because it helps to determine the health of your country's economy.

Supply and demand are basic to economics and they impact our lives every time we buy something.  This is why they should be of interest to us.

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claramolee | eNoter

Posted January 23, 2011 at 3:45 PM (Answer #2)

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Factor price equalization is an effect observed in models of international trade -- that the prices of inputs to ("factors of") production in different countries, like wages, are driven towards equality in the absence of barriers to trade. This happens among other reasons because price incentives cause countries to choose to specialize in the production of goods whose factors of production are abundant there, which raises the prices of the factors towards equality with the prices in countries where those factors are not abundant. Shocks to factor availability in a country would cause only a temporary departure from factor price equality.

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