Gasoline and Dollars: Supply and Demand
Economic Concept: The Law of Supply
According to the law of supply, the increase in the price of the product leads to an increase in the supply of this product. This happens due to the desire of the manufacturers, deliverers, and suppliers to gain more on the product. The law of supply is aimed at showing the ratio of goods and prices where the number of goods available depends directly on the price of these products. As such, the increasing prices can be explained with the help of the law of supply which stipulates that the increased supply leads to the growth of prices.
The article under consideration is aimed at investigating the reasons for the growing prices of gasoline in the United States of America. The author claims that the law of supply and demand suggests a completely different scenario from the one that currently takes place in the territory of the US. The prices approach $5 while the market does not experience shortages in the supply of this product which can be considered one of the world commodities.
However, the rule of supply about the prices established is completely applicable to the situation with the supply and prices displayed in the graph. The current situation reveals abnormal price policies disregarding the oversupply and increased demand. In this respect, the flow of things in this situation is unnatural because the product which is currently in demand should be widely supplied to the market. At the same time, it is normal that the product is supplied actively to the market and the prices grow rapidly as well.
This phenomenon can be explained using the law of supply where the product that is actively supplied to the market would grow in price because the dealers in the market want to gain more while the product is still in demand because the growth of supply is predetermined by the growth of demand. As such, the product which is in demand would never decrease in price if the supply is sufficient. This means that the law of supply works perfectly in this case while economists that claim that the situation is unnatural should review the concepts of the supply and demand ratio and its relations to the price policies and the influence of the supply on prices established on products and vice versa.
India to Step up Economic Growth, But Inflation Remains a Concern
Economic Concept: Economic Growth
The concept of economic growth can be explained through the positive changes in the country’s or organization’s economy compared to a previous control period. As the economic growth of the country’s economy is usually measured within the fiscal year, the currently reviewed article concerns the Indian economic growth about the growth of employment and demand. Production must grow as well as the employment rate due to the increase in demand for various types of goods. When applied to the country’s economy the economic growth stands for the gross domestic product (GDP) increase per capita which means the changes in the GDP measured annually.
The article under discussion is the “India to Step up Economic Growth, But Inflation Remains a Concern” which dwells on the possible rate of the economic growth that can be reached in India in 2017 while many experts claim that the inflation ratio is sure to prevent the economy from growing in such a pace. However, it is necessary to take into account inflation which is the result of growing prices that are not typical of the increased demand.
The point is that when the demand rises, the supply should rise as well to ensure that all needs are satisfied; when the demand is high and the supply is low, a deficit occurs which means that there is an insufficient number of goods to provide all in need with these items. At the same time, when the demand is low, the supply is low as well because producers of goods see the situation and do not want to oversupply the market. The current situation in India shows that the demand and supply are high which provides a good basis for economic growth due to the growth in manufacturing that leads to high employment rates.
The expected economic growth will be measured within 2012-2017 years though the inflation rate may prevent the economy from growth. However, the previous period analyzed was the 2010-2012 period when the economic growth was 8% which shows good results. Regarding the graph, it is necessary to take the inflation rate into account though the expected economic growth is not as high as it was in the previous period when the economies of all countries experienced a recession.
Bade, Robin, and Michael Parkin. Foundations of Macroeconomics. 4th ed. White Plains, NY: Addison-Wesley Longman, Incorporated, 2009.
McCann, Steve. “Gasoline and Dollars: Supply and Demand.” American Thinker. 2011. Web.
Pasricha, Anjana. “India to Step up Economic Growth, But Inflation Remains a Concern.” Voanews.com. 2011. Web.