Domino Effect
Bianca Piedra
Prof.Echevarria
Term Paper
ECO2023
“The domino effect in our economy”
Macroeconomics is the study of major economic totals, and focuses on the larger economic issues affecting not just individuals, but the global economy. With knowledge about the economy as a whole, macroeconomic forecasts can help individual firms make microeconomic decisions. While microeconomics and macroeconomics are different, it is easy to illustrate how each one affects the other, either directly or indirectly. Consumption is spending by households on goods & services. Every person’s individual overall wealth and economic well-being is influenced in one way or another by much larger forces from customer tastes and preference, opportunity cost, and supply and demand.
The major determinants of consumer demand are income, the price of related goods, taste and preferences, expectations and the number of buyers. Taste and preferences are behind whether we like something or not. What determines these tastes and preferences is beyond economics, and are included only because of their significant influence on demand. Consumers may clamor for an item one year and ignore it the next. The clothing industry is a very good example because it is particularly vulnerable to quickly changing tastes, and the need to satisfy its customers. We usually think about demand in the two dimensional way that we are restricted to visualizing it in with a graph. That is, the amount demanded is a function of price. In actuality there are several other factors which determine demand that are embedded in those graphs but not visualized. For instance, we know that the level of income influences demand as does the availability and price of substitutes and something called tastes and preferences. For instance, if you hate beans, lowering the price is not likely to tempt more quantity demanded, though we might show the demand curve for beans for a group as a function of the price. Each commodity
Prof.Echevarria
Term Paper
ECO2023
“The domino effect in our economy”
Macroeconomics is the study of major economic totals, and focuses on the larger economic issues affecting not just individuals, but the global economy. With knowledge about the economy as a whole, macroeconomic forecasts can help individual firms make microeconomic decisions. While microeconomics and macroeconomics are different, it is easy to illustrate how each one affects the other, either directly or indirectly. Consumption is spending by households on goods & services. Every person’s individual overall wealth and economic well-being is influenced in one way or another by much larger forces from customer tastes and preference, opportunity cost, and supply and demand.
The major determinants of consumer demand are income, the price of related goods, taste and preferences, expectations and the number of buyers. Taste and preferences are behind whether we like something or not. What determines these tastes and preferences is beyond economics, and are included only because of their significant influence on demand. Consumers may clamor for an item one year and ignore it the next. The clothing industry is a very good example because it is particularly vulnerable to quickly changing tastes, and the need to satisfy its customers. We usually think about demand in the two dimensional way that we are restricted to visualizing it in with a graph. That is, the amount demanded is a function of price. In actuality there are several other factors which determine demand that are embedded in those graphs but not visualized. For instance, we know that the level of income influences demand as does the availability and price of substitutes and something called tastes and preferences. For instance, if you hate beans, lowering the price is not likely to tempt more quantity demanded, though we might show the demand curve for beans for a group as a function of the price. Each commodity
Bibliography: http://economics.about.com/cs/studentresources/f/macroeconomics.htm http://books.google.com/books?id=iiNLQK2jIxYC&pg=PA39&lpg=PA39&dq=macroeconomics+taste+and+preferences&source=bl&ots=Ef5QmwhXIo&sig=D3jtb_S1FFA4C3ZDCpxKglevIio&hl=en&sa=X&ei=HSZrUYadGYLQ8QTIroGYCA&ved=0CGwQ6AEwCA#v=onepage&q=macroeconomics%20taste%20and%20preferences&f=false http://www.investopedia.com/university/economics/economics3.asp