Rarely Discussed Economic Facts For You to Consider Article written by K.T.

September 4, 2012

First, lets talk about some of the economic factors that everyone should be aware of. I'll start this article by discussing the demand and supply curve, which happens to be depicted above.

The demand curve is the relationship between price and quantity that's demanded. Demand is only defined for a specific amount of time.

Next, let's talk about some of the determining factors of demand.

These are widely based upon the price of the product and the consumer's income. They are also based upon the price of complimentary goods. The third determining factor would be based upon the consumer's preferences.

The individual demand curve shows the correlation between the prices of the goods and the specific quantity which may or may not be demanded. An important word/set of words to keep in mind would be ceterus peribus. What does this mean? It serves as a reminder that in order to isolate the relationship between price and quantity demanded, we must assume the amount of income and the prices of related goods. Okay, now that the demand curve has been discussed, let's talk about the supply curve.

The supply curve is defined as the price of a product, cost of inputs consumed for production, state of production technology, producer expectations and taxes of subsidies from the government. When discussing the individual supply curve, here's something for you to keep in mind:

Marginal cost is defined as the cost of producing one more unit.

Another factor to consider when discussing economics would be the price elasticity of demand. What does this refer to? Well, here's a couple of things to keep in mind when thinking about the the price elasticity of demand:

Responsiveness of the quantity that is demanded. If supply cannot meet demand at a similar pace, this is when you will see a pattern of price inflation. If demand cannot meet the needs of supply, prices are likely to do the opposite by decreasing. Noticing trends in economic conditions are vital to understanding the overall subject.

When discussing price elasticity and the demand curve, you would want to think about what is elastic, unit elastic, perfectly elastic and perfectly inelastic. The determining factors of elasticity are the availability of substitutes, demand for a product, time, the consumer's budget and luxury goods. Another thing that you would probably want to know is how to predict changes in quantity. This is going to require some basic math to figure out, but here goes: The variables can be considered as price elasticity of demand, percent change in quantity and percent change in price. A good example would be food and beverage consumption. Not only should you consider the thought of price elasticity, but another factor that you would want to consider would be total revenue. I'm sure that we all know what revenue is but I'll explain it anyway, just in case there's any misinterpretations or confusion. Revenue is an undefined amount of money that a business or individual makes from sales. Something that most accountants and economists are very familiar with. Furthermore, let's discuss price elasticity and total revenue. If demand is elastic, there will be a negative relationship between price and total revenue. If demand is inelastic, there will be a positive relationship between price and total revenue. If demand is unit elastic, consumers will purchase a smaller number of available units. Now, let's get back to some more interesting facts about the demand and supply curve. Once more, I'll start with the demand curve:

Increase in price decreases the quantity demanded, which happens to follow the law of demand. Changes in prices causes movement along a demand curve and a change in quantity demands. Consumer income is held fixed as we draw the market demand curve. The price of the product is not held fixed in drawing a market demand curve. Consumer expectations about future prices are held fixed as we draw the market demand curve.

Now that we've discussed elements of the demand curve, let's talk about the supply curve. Here goes:

Increase in price increases the quantity supplied, which follows the law of supply. Wages that are paid to workers are held fixed when drawing a market supply curve. The intersection of the supply and demand curve is defined as the market equilibrium. An excessive amount of supply is likely to occur when the price is greater than the equilibrium price. An excess amount of supply will cause the price to decrease. The result of the change in price will cause an increase in the demanded quantity and the quantity supplied will decrease.

Now that we've discussed some basics of economics, let's get to the facts and figures of how our economy has been doing since the recession of 2008 to now. The information that you're about to see may come to you as a surprise, but if you normally follow this kind of information it may not. Here goes:

According to Paul Osterman, about 20% of all US adults are currently working jobs that pay poverty-level wages. The Federal Reserve recently reported that the total net worth of US households have declined by 4.1% in the 3rd quarter of 2011. 48% of Americans are considered to be living on low income or in poverty. Approximately 57% of all children in the US are considered to be living in low income or poverty-stricken conditions. The US Postal Service has lost more than 5 billion dollars in the past year. 16% of elderly Americans are living below the Federal poverty line. 6.7% of Americans are living in extreme poverty, which happens to be the highest number reported thus far. 14% of Americans are on food stamps or similar government assistance. Banks are stronger than ever The national debt is near $16 trillion dollars. The debt was only $10.6 trillion before the Obama administration. 48.5 percent of Americans live in a household that receives some form of government assistance. According to a recent study, CEO pay at America's biggest companies has increased by 36.5% in the course of one year. According to the Bureau of Economic Analysis, health care costs accounts for approximately 16.3% of all personal consumption. According to a recent gallop poll, approximately 20% of employed Americans consider themselves to be underemployed. The average amount of time that a worker stay unemployed in the US is now more than one year. Since 2007, median household income in the US has decreased by 6.8% when adjusted for inflation.

The list of economic and sociological facts goes on and on, but if you believe that the economy is improving because the mainstream media is telling you that it is, then you're sadly mistaken. Sooner or later, the American people will have to wake up and realize that things are not getting better and they most likely will not get any better no matter what a politician feeds you on television or radio. First, you have to realize that it's not the president's job to improve the economy. However, it is the president's job to work with Congress to approve bills. With that being said, our current president states that he wants to "bypass" Congress and create laws on his own. That is not the way that the political system is supposed to operate. Taking on such a responsibility without reasonable approval implies that the president supports a dictatorial form of leadership. The economy is not improving and at this point, it will not improve. We have reached a point of no return, and this is what people have to realize.