Assesment 2 Coursework Example | Topics and Well Written Essays - 1500 words

Assesment 2 - Coursework ExampleIn a grocery store economy the price establishment automatically acts as a rationing instrument. With the help of the diagram given above we suffer good explain the determination of market price and at the given shoot and supply functions and the system depart not allow either of the agents to exploit other.The horizontal and vertical axes measure standard and price respectively. D is the market demand curve showing the one to one accord between price and market demand. S is the market supply curve that reflects the producers behaviour. S is nothing but the one to one correspondence between market price and supply of it. Equilibrium is achieved at point E where market demand equals market supply. The equilibrium level of price is OP* and quantity is OQ*.Now we consider that producers want to exploit the consumers by charging higher price. What give be the impact$2 Lets consider that the producer charges juvenile price OP**. At that price leve l the producers will be willing to supply OQ** amount of turnout while the consumers are willing to purchase OQd amount of the product. Hence at price OP** the market will face excess demand to the extent AB.This excess demand would cause a downward obligate on price as the producers have the unsold stock in the hand. Price fall would be followed by contraction in supply (movement from B to E) and extension in demand (movement from A to E). This suffice is continued unless the previous equilibrium is achieved. Here automatic adjustment of price will control the quantity in the market.To answer the aforesaid question we need to know what wealth is. Generally wealth can be defined as something that can generate income or can satisfy human wants. riches must be measurable tangible, transferable and scarce in nature.When the goods are produced through the production suffice it adds to the stock of wealth of the nation. As good is measurable, tangible