Week 1 Khan Academy Videos: Changes in Market Equilibrium: Microeconomics and The Laws of Supply and Demand Simulation
Watch the Khan Academy Video "Changes in Market Equilibrium" located in the Week 1 Khan Academy Videos.
https://www(dot)khanacademy(dot)org/economics-finance-domain/microeconomics/supply-demand-equilibrium/market-equilibrium-tutorial/v/changes-in-market-equilibrium
Write a 900 -word paper summarizing the content of the simulation and address the following:
Identify two microeconomics and two macroeconomics principles or concepts from the simulation/video.
Explain why you have categorized these selected principles or concepts as microeconomics or macroeconomics.
Identify at least one shift of the supply curve and one shift of the demand curve in the simulation/video.
Explain what causes the shifts, and how each shift affects the price, quantity, and decision making.
Include responses to the following:
How might you apply what you learned about supply and demand from the simulation/video to your workplace or your understanding of a real-world product with which you are familiar?
How do the concepts of microeconomics help you understand the factors that affect shifts in supply and demand on equilibrium price and quantity?
How do the concepts of macroeconomics help you understand the factors that affect shifts in supply and demand on the equilibrium price and quantity?
How does the price elasticity of demand affect a consumer's purchasing and the firm's pricing strategy as it relates to the simulation/video?
Cite a minimum of 3 peer reviewed sources.
Microeconomics and The Laws of Supply and Demand simulation
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Background
The equilibrium price or quantity might change due to changes in supply or demand. Demand is related to the willingness of the buyers to purchase goods while supply is the willingness of the suppliers to sell. Price is determined through the interaction of demand and supply, whereby as the demand increases the prices increase as the suppliers cannot keep up with the demand. On the other hand, when the supplies increase with no rise in demand, the prices reduce. Movement along the demand curve is associated with changes in quantity demand because of price change, while shifts in demand relate to changes in demand preferences independent of the price effect (Hill & Myatt, 2007).
Microeconomics and macroeconomics principles from the simulation/video
Microeconomics deals with the single factors that affect households and firms while macroeconomics relates to the large-scale economic factors that affect economy as a whole. The demand and supply curve interact where there is equilibrium price and quantity (Tucker, 2011). However a shift in either of the curves has a direct impact on the economy. The two main microeconomics concepts are the interaction of demand and supply as well as the market competition. The factors affecting demand or supply cause a shift of either of the curves. In the case of macroeconomics, the constraints affecting the demand and supply of apples and unionization affect the production of apples.
The demand and supply of apples is a macroeconomic factor since the actions of individuals and the reaction of suppliers influence price changes. Where there is increased demand for apples the price rises, and while there is increased supply the prices of apples declines. Additionally, market competition is a microeconomic concept, since the apple market responds to changes in quantity demanded and supplied for there is no single buyer or supplier who influence demand and supply respectively.
On the other hand, constraints affecting the demand and supply of apples are macroeconomic in nature since this affects the production of apples as a whole for the region growing apples. Unionization also represents the effect of macroeconomics given that the actions of union then urge negotiations with suppliers who have to pay more to the workers and this increases the labor cost, a key input to the production cost.
Shift of the supply curve and the demand curve
In the in the simulation video, the shifts in demand are a result of studies revealing the positive impact of apples to preventing cancer, and an ad campaign among the pear industry players. The shifts in supply o...