Microeconomics

The factor I chose is ‘Demand and Supply both count’. We always see the demand of product or services as the most important thing in a market. Although, the book helps to understand how one depends on another. A good example of that is what happened to when the Iphone, launched by Apple, came to the cell phone market a few years ago. The balance between the demand and supply didn’t happen, what created a bad image of the company that was selling the product. We watched thousands of people staying in line for days to get the phone and they didn’t have enough products to sell. This was caused because the manufacturing company didn’t expect that the product would be so successful and didn’t produce enough. Therefore, the demand was a lot higher than the supply.

2) ‘How markets eliminates surplus and shortages’. This is very common on today’s economic situation, which makes it very significant. This factor helps to figure out the tendencies of the market. We see that companies to eliminate the surplus make the prices fall to raise the quantity demanded. This situation can be observed in the automobile market, where dealerships have too many cars in stock, and then they decided to lower the prices to get more demand and eliminate the surplus. On the other hand, it can happen the opposite when a car is highly desired; they might raise the price to stop the shortage of stock.