Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 1 - Part I - Ten Principles of Economics - Quick Check Multiple Choice: 1


a. how society manages its scarce resources

Work Step by Step

Society manages its scarce resources through a market economy. A market economy is one in which individuals are empowered by the government to own and control scarce resources, and in this economy, people decide who to work for and what to invest time and money on. Economic interdependence has multiple benefits which we enjoy in our everyday lives. Certain products are unique to select areas where a demand is created for a multitude of items across the country. Instead of having to find a way to produce such an item, regions are able to market their unique goods for others and receive what they need in return. Having this interdependence allows for trading and thus an increase in quality of life for people.The demand curve reflects how the quantity of good demanded by the consumer is dependent upon the price, so if the price of an item goes down, the demand for additional quantity rises. This would result in the demand curve sloping downward. For the supply curve, this shows that the quantity of an item supplied is also dependent upon price. If the price of an item rises, the quantity supplied also rises, resulting in the supply curve sloping upward.The point of equilibrium is where the supply and demand curves intersect.
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