Evaluation Essay Sample on Techy Issues of Demand in Economics

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Posted on January 31, 2008

The theory of economics is based on the result of human actions in the market system. The main features of economics principles are deeply rooted in its formality and that is constrained by the number of assumptions or economic thinking which forces the business world to see and interpret the economy of any organization in a certain way.

The relationship between the product price and its demand is what is called the demand curve. As the price gets on the higher side, the demand of a particular product will be decreased. In other word, demand refers to how much quantity of a particular product is needed by the people and that demanded quantity of the product will specify the price of that specific product people willing to buy. The quantity demanded will represent how much the market can offer, so the price fluctuates with the demand of the particular product.

The most difficult implication in implementing the law of demand is to understand the maximization of equilibrium between demand and supply. The equilibrium can be defined as a situation where no one is willing to change his behavior. And if the price is set too high then there will be minimum buyers but excess supply. And because most of the movie theatre over head expenses are dependent on how many people show up. So much increased price will cause adverse effects because the most important factor of elasticity of demand is how much the demanded quantity will be affected by the price change. For example, 2 % increase in the theatre tickets will result in a 1 percent decrease in the quantity demanded.

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