2006-09-13 21:06:09 · 5 answers · asked by sunnie 1 in Business & Finance ➔ Other - Business & Finance
Supply and demand rule. When their is a short supply Example: (gasoline) and a high demand then prices are higher.
2006-09-13 21:10:34 · answer #1 · answered by soniaatcalifornia 5 · 0⤊ 0⤋
People have UNLIMITED wants. At the same time the (material) resources available to fullfill those wants are SCARCE. Wood is scarce. Oil is scarce. Human labor is scarce.....etc. As a result of this situation, the main economic question becomes: "WHERE should these scarce resources be applied?" As a social system, only Capitalism has been able to answer the above question most EFFICIENTLY. Here's how: Profits and Losses tell us WHERE resources should be applied. When you see high profits, you see the marketplace providing a signal that this is an area of HIGH demand. Scarce resources should be applied to this area. On the other hand, when you see large losses, it is also a signal. But this signal says that this is an area of LOW demand. Scarce resources should be removed and applied to where demand is higher. In order to have Profits and Losses, you MUST have Prices. In order to have Prices, you MUST have Private Property and Trade. Capitalism is a system that contains Private Property, Trade, Prices, and Profits and Losses. Under Socialism, there is NO Private Property, hence NO Trade, hence NO Prices, hence NO Profits and Losses. Under Socialism, all decisions as to WHERE scarce resources should be applied are made by political whim. Naturally, we saw the massive poverty created by such a sytem in Soviet Russia, and we continue to the same results wherever Socialism still exists today. Socialism is missing the VALUABLE indicators of Profits & Losses. Ever since the great economist Ludwig Von Mises made this discovery in the 1920's, Socialism has been intellectually finished.
2016-03-27 00:47:41 · answer #2 · answered by Martha 4 · 0⤊ 0⤋
One thought is you will have to many dollars chasing too few goods resulting in higher prices.
2006-09-13 21:15:46 · answer #3 · answered by no nickname 6 · 0⤊ 0⤋
raise in prices, illegal goings on between the people that have the commodity and the people who want it, and can control it, oil prices ,etc.
2006-09-13 21:08:25 · answer #4 · answered by Anonymous · 0⤊ 0⤋
price volatility
processing bottleneck
2006-09-13 21:22:27 · answer #5 · answered by Anonymous · 0⤊ 0⤋