Economics

A response to the Misunderstood Activity
created by Isaac Kimunio (@Dr. Isaac Kimunio)

Number of views: 128

  1. An important  concept that is often misunderstood in Economics is the theory of demand and Supply.  The theory is based on two laws: The law of demand and the law of supply. Demand is high when prices are low and supply is high when prices are high. The interaction of demand and supply creates the equilibrium price.
  2. Explain two impacts/effects of not understanding this concept:
    • Time is a factor that can affect equilibrium price
    • Artificial shortages (hoarding of goods) can increase prices
    • Sometimes there is need for government intervention
  3. Two ways in which I would make the concept make sense to students:
    • Explain the theory using practical examples
    • Explain the shortcomings of the theory
  4. Extend your thinking on this misunderstood concept. How would you explain your concept through an analogy?
  • Suppliers aims at maximising profit by selling at higher prices while buyers aim at saving by buying at low prices

Leave a Reply

Your email address will not be published. Required fields are marked *