Economics in Our Everyday Lives
You may not know it, but your everyday activities and just about everything you do involves economics. Economics is a social science that has to do with the study and understanding of how goods and services are produced, distributed, and consumed. Goods and services are a part of our everyday lives. Can you imagine a day without consuming a single good or enjoying a single service? The supply and demand of all these consumer goods and services affect just about everything in our lives.
Whenever we go out and say visit the mall to check out the latest trends in fashion, grab a copy of the newest release of our favorite video game, watch the latest blockbuster movie, and buy groceries from the supermarket – we communicate to the stores what goods and services we need. Our buying patterns tell the stores what items we need and are willing to spend on. This, simply put, is demand. It is defined as a consumer’s capacity and willingness to pay for a specific good or service.
Business owners are very interested to know about the demand of their customers. Demand tells business owners about the buying patterns of their customers – what they buy and how much they buy. They use this information when deciding what to offer in their stores. When business owners purchase inventory from manufacturers, they base it on demand. They think about what you purchased in the past and how much; and they predict what you will buy in the future and how much. This is supply, which is the quantity of any good or service that a store offers in a particular price and time.
Supply and demand go hand in hand in a market economy. For an economy to prosper businesses should be able to offer what consumers need and want and consumers on the other hand must be able and willing to spend their money. Through this, economic equilibrium is met.