Identify A Good You Commonly Use Or Would Like To Use Explai

Identify A Good You Commonly Use Or Would Like To Use Explain At Leas

Identify a good you commonly use or would like to use. Explain at least three factors that would result in a shift in the demand curve for that good and three factors that would result in a shift in the supply curve for that good. Describe the effect on equilibrium price and quantity of each factor. Finally, explain how the shifts in demand and supply are different from movements along the demand curve or movements along the supply curve and why the distinction is important.

Paper For Above instruction

A widely used product that I frequently utilize and would like to continue using is the smartphone. Smartphones have become an essential part of daily life, serving communication, entertainment, and productivity purposes. Analyzing the demand and supply factors influencing smartphones reveals vital insights into market dynamics and consumer behavior.

Factors Affecting Demand: Firstly, technological advancements significantly impact demand. As new features and innovations emerge, consumers are more inclined to purchase upgraded models, shifting the demand curve rightward. Secondly, income levels influence demand; when consumers experience an increase in income, their purchasing power rises, leading to higher demand for smartphones, especially premium models. Conversely, economic downturns decrease demand as consumers prioritize essential expenditures. Thirdly, changes in consumer preferences, such as the desire for better camera quality or 5G connectivity, can shift demand as manufacturers introduce devices meeting these preferences, increasing overall demand.

Factors Affecting Supply: On the supply side, production costs play a critical role. A decrease in the costs of components, such as microchips, allows manufacturers to produce more smartphones at lower costs, shifting supply to the right. An increase in labor costs or tariffs on imports can restrict supply, shifting the curve leftward. Additionally, technological improvements in manufacturing processes enhance productivity, enabling higher output levels at the same or lower costs, thus increasing supply. Global supply chain disruptions, like pandemics or geopolitical tensions, can decrease supply by hampering production and distribution channels.

Effects on Equilibrium Price and Quantity: When demand increases (shifts to the right) due to technological improvements or higher consumer income, the equilibrium price tends to rise, and the equilibrium quantity increases as well. Conversely, if demand decreases, prices fall, and fewer units are sold. An increase in supply, driven by technological innovations or reduced production costs, results in a lower equilibrium price and higher quantity, benefiting consumers. A decrease in supply, perhaps due to supply chain disruptions, causes prices to rise and the quantity exchanged to decline.

Demand and Supply Shifts vs. Movements Along Curves: Shifts in demand or supply curves occur when external factors alter the entire relationship between price and quantity, leading to a new equilibrium point—either higher or lower. In contrast, movements along the curve happen solely when the price of the good changes, and this results in a change in the quantity demanded or supplied without shifting the entire curve. Recognizing this distinction helps in understanding whether market changes are due to external factors affecting overall demand or supply or simply due to price fluctuations within the existing market framework. This understanding is vital for policymakers and businesses planning for potential market responses.

In conclusion, the interplay between demand and supply factors intricately influences market prices and quantities. External determinants such as technological advancements, income levels, and production costs cause shifts in these curves, moving the market toward a new equilibrium. Differentiating between shifts and movements along the curves improves comprehension of market mechanisms, essential for making informed economic decisions and predictions.

References

• Krugman, P., & Wells, R. (2018). Economics (5th ed.). Worth Publishers.
• Mankiw, N. G. (2020). Principles of Economics (9th ed.). Cengage Learning.
• Case, K. E., Fair, R. C., & Oster, S. M. (2019). Principles of Economics (12th ed.). Pearson.
• Samuelson, P. A., & Nordhaus, W. D. (2010). Economics (19th ed.). McGraw-Hill.
• McConnell, C. R., Brue, S. L., & Flynn, S. M. (2018). Economics (21st ed.). McGraw-Hill Education.
• Perloff, J. M. (2016). Microeconomics (8th ed.). Pearson.
• Parkin, M. (2019). Economics (13th ed.). Pearson.
• Frank, R., & Bernanke, B. (2020). Principles of Economics (7th ed.). McGraw-Hill Education.
• Samuelson, P. A. (2002). Economics. McGraw-Hill.
• Hubbard, R. G., & O'Brien, A. P. (2018). Microeconomics (6th ed.). Pearson.