Economics Discussion Essay - 1100 Words

Economics Discussion (Essay Sample) Content: Economics Discussion In economics, the major determinants of consumer demand are income, the price of related goods, tastes and preferences, expectations, the number of buyers in the market. The same thing applies to this case where the school has received a major financial boost from the State. Since the school is getting more money from the State for school supplies, it means that the State has increased the schools income level. Ideally, income influences customers ability to purchase goods and services. Therefore, the schools increased income will lead to an increase in its expenditures. In fact, since books and computers are some of the schools normal goods, an increase in its income will lead the school into purchasing more of these goods. In this case, as the school spends more on supplies such as books and computers, their prices are likely to increase because of the increased demand. As a result, parents will have to seek for an alternative way of funding th eir childrens education. They will have to seek for a way to complement the States funding. Therefore, parents had to plan their budget for the coming academic year after receiving news about State funding. Therefore, parents must have felt that they needed to react to it by funding those areas the State had not funded. Therefore, they must have thought about something that would act as a complement for computers and texts that the school had received from the State. As stated in economics, a complementary good is a good that when the price of the complementary good increases, the demand for the good in question decreases. Additionally, since the school is has received funding from the State, there are high chances that it will increase its expenses given that it has enough money at its disposal to spend. The increased spending is likely to go on even after the funding from the State is over. As a result, the increased expenses will be transferred to parents in form of increased school fees. Parents have therefore realized that this may happen in the near future and feel they should transfer their children to other schools where there are very minimal chances of increasing the fee. Therefore, schools where parents will transfer their children will serve as a substitute to their current school. In economics, a substitute good is a good whose increase in price shifts the demand for another good. From this scenario, therefore, there is a subs...