Laws of Supply and Demand

An economy of a country consisted of labor, capital and land resources an could be also describe as a social network, where goods and services are exchanged according to the laws of supply and demand.

Supply and demand is the most fundamental concepts of economy and is used mostly in the market economy. Demand refers to the quantity or how much the consumer is willing to buy and is affected by the increase and decrease of prices. The law of Demand states that "as prices increases, the demand decreases." Supply represents how much the market can offer. The quantity of supply refers to the amount of a certain good, that the producers are willing to buy when receiving a certain price. Therefore the price is the inverse of demand and supply.

VEBLEN GOODS & GIFFEN GOODS

high status items such as luxurious cars, expensive clothes or jewelry is what every men and women wants. Veblen goods is what appeals the most to us, because it shows high value and the demand increases as the price increases. Similar to Veblen goods, the other type of good that is part of the demand law is Giffen goods. The demand for Giffen goods increase as the price increase, because people value them as a higher quality. Both names come from famous economist who attributed their ideas to the law of demand. 

The Struggle for Oil

The quantity of a good or service that consumers are willing and able to purchase at a given price in a given period of time has an economical term known as the demand. One of the basic concepts of Economy is that, if the product of a good is produced more often, the price decreases and the demand increases, but the laws of supply and demand don't always apply on the oil prices. Many OPEC Leaders, who's economy is highly dependent on oil resources have struggled to stabilize the prices at a level that fits their economy.


 "The price rise is a function of optimism that better things are coming in the future." 

- Saudi Oil Minister Ali al-Naimi.

 As an unrenewable resource such as oil, is in high demand for many leading countries, and has to be set in a high price so that the profit fits the consumer. An Average price for a consumer would be 60$ dollar a barrel, yet this changes depending on how much storage each country has to offer. The storage is the amount of product or in that case oil, that they have, and since a lot of that is being sold very quickly, because the demand of oil increase as technology does, the prices have to be set on a certain number, that benefits the consumer and the supplier (the economy). If most of the "Oil rich countries" were set in a crises, the prices for a barrel would decrease dramatically and that would have a major effect on the global economy. Countries such as China have build up strategic oil reserves. If every country would continue like China does, than most of the prices can be brought up again and that would increase the supply for demand again. The demand increases as the supply decreases which affects the price settings of oil. For now the danger that the price will shoot up, is not in a very high range, but eventually the prices might go up to 110 $ a barrel in 2015 and by the end of 2015 it might increase up to 130 $ barrel a day. 

What is Economics?

Economics is the study of how people chose to use resources. This includes what is available in land, infrastructure, other tools and the knowledge of how to combine them to create useful products. Often people use resources to manufacture goods that benefit the satisfaction of the people. Economics is also the basic study of labor, land and investment of money for income and production. Economist seek to learn the comparison of rich and poor or different businesses that might have a great impact on the economy. The most famous book in economics is Inquiry into the Nature and Causes of The Wealth of Nations written by Adam Smith