One would be hard pressed these days to find any defenders of the sort of full-blown economic plannification characteristic of the late Soviet Union and other Communist states, and with good reason given their economic inefficiency.

The departure from plannification is, of course, celebrated by neo-liberal champions of capitalism. Critics of unbridled capitalism are less enthusiastic about the embrace of economic markets, which are correctly seen as promoting inequalities and objectionably competitive values.

The Law of Supply

As you’ve learned, consumers demand products and services at the lowest possible prices. In contrast, suppliers like Microsoft exist to make a profit—hopefully, a big profit. As you read this section, you’ll learn about the law of supply and how it is geared toward making profits.

The word demand has a special meaning in economics. Most American teenagers own a pair of sneakers. Because of high demand and high price, however, not everyone who wants a pair of Nike Air Force 1 sneakers is able to acquire this particular brand. As you read this section, you’ll learn that the idea of demand centers on people being both willing and able to pay for a product or service.

The Many Uses of Economic Tools

Economics was first developed to study the production and distribution of goods and services. he boundaries of the field are much broader now. For example, economists have expanded their sights from the wealth of nations to the health of nations, with goals to get more out of our limited health care resources.


Managing Complexity

The U.S. economy consists of millions of buyers and sellers of goods and services. Think about all the economic activity near where you live. Even in a small town there are dozens of businesses, hundreds of workers, and thousands of items that could be purchased on any given day. You could not possibly keep track of all the decisions that affect the economy of a small town.

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