Exercise 3-3 Graph example

Exercise 3-3 Graphing Changes to Demand

Factors contributing to changes in demand include: a change in preferences, increases and decreases in income with relation to normal and inferior products, price of substitute products, price of complementary products, expected future prices and income and population changes in income or age distribution (Sayre,Morris)

An example in a drastic demand for a product would be the movie rental business. The two largest players in the industry, Rogers and Blockbuster, are currently in the process of closing stores, liquidating their inventories and laying of staff. Changes in demand for their product were the factors that led to this.

• Preferences change to online distributors and on demand products which offer easier accessibility and convenience for customers.
• A proliferation of new more affordable products from cable, satellite and internet sources utilizes technology which increased supply and lowered prices.

Exercise 1-2 : Production Possibilitiy Curves

Economic Models using graphs to illustrate production possibilities were given in our economics text, Principles of Microeconomics 6th Edition, Sayre, Morris; The graph curves given in Chapter 1 in Figure 1.1 and 1.2  show the opportunity costs in relation to cars and wheat and the quantity produced. Technological changes as outlined in Figure 1.3, show that consumer and capital goods production with addition of technological improvement give wider choices in regards to increasing production in one or both areas. Economic growth in relation to capital or consumer goods produced is outlined in Figure 1.4, higher capital production will enable faster growth.

The figures give information on scarcity, opportunity costs and choice. Scarcity is applicable to many of society's needs and wants, opportunity costs outline the next best choice of producing something else and choice is the decision of what best to do. These three components are depicted as a curve. The points along the curve show relationships to costs and quantities due to scarcity and the sacrifices incurred due to the choices made in regards to the focus of production.

Personal decisions in my own life due to my economic situation affect most of my decisions regarding what I buy, own and how I spend my time. As a student affordable measures including operating a compact car, accessing  lower rent housing and preparing less costly meals as opposed to eating out have become a reality. Spending less time socializing and enjoying extra-curricular activities is also evident in a demanding scholarly atmosphere.

 A significant opportunity cost I have experienced by returning to school is a reduction in wages earned as well as a high education cost but the benefit is a greater salary potential in the future.