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The Economics of Prom
Transcript of The Economics of Prom
Scarcity is the economic problem that relates to unlimited wants in a world of limited resources. The production cost of an item can determine whether or not it is scarce. if an item is scarce or limited in production, the cost of that item will most likely be higher. Limitations in land, labor, capital, and entrepreneurship can result in scarcity of certain resources.
opportunity cost refers to the cost of an alternative that must be forgone in order to pursue a certain action. In other words, opportunity cost refers to the benefits you could have received by choosing another action. An example of opportunity cost: the opportunity cost of going to college is the money you could have earned by working instead. opportunity cost always results when a choice between two objects or actions must be made.
Supply represents how much the market can offer given the available factors of production. Quantity supplied refers to the amount of a certain good producers are willing and able to supply at a certain price. A supply curve demonstrates the relationship between price and quantity supplied. The law of supply states that When price goes up, there is an increase in quantity supplied, and when price goes down, there is a decrease in the quantity supplied.
Prom is a very important event that occurs once a year. Typically, prom is an event for juniors and seniors of high school. Prom usually consists of taking pictures with friends, possibly going out to dinner, then attending the dance. Although it may not seem like much, attending prom can easily cost an individual hundreds of dollars. when examining the economic aspects of prom, one must take into consideration the cost of the ticket, cost of attire (suits, shoes and dresses), cost of dinner, and cost of transportation (ex: limo). For girls, preparing for prom often entitles a hair, make-up, and nails appointment that must be factored into the overall cost as well. There are many topics of economics that can be applied when analyzing the cost of attending prom.
demand refers to how much of a product/service is demanded by buyers. Quantity demanded is the amount of a product consumers are willing to buy at a certain price. the law of demand states that the higher the price of a product, the less people will be willing to buy it. A demand curve represents the relationship between quantity demanded and price. Changes in price cause changes in demand.
disequilibrium describes a market that is not in equilibrium. The quantity supplied is not equal to the quantity demanded at the actual price. On an macro-economic scale, equilibrium is caused by a high propensity to import goods or a lack of confidence in an economy. Corrective action must be taken to prevent the economy from draining its foreign currency reserves.
A tax is an involuntary fee levied on corporations or individuals that is enforced by the government in order to finance government activities. Money provided by taxes is used to carry out many functions including war expenditures, education, and public works. Taxes, such as sales tax, are often placed on goods and services and cause an increase in price. Taxes consist of direct or indirect taxes.
Externalities refer to the consequences of an economic activity, experienced by unrelated third parties. Externalities can be positive or negative. An example of a negative externality is air pollution produced by a factory making goods. A positive externality can be a well educated work force causing increases in productivity.
Scarcity relates to the economics of attending prom
Although there is a very high demand for dresses, there are limited options based on stores near you.
There are limited limo's available for rental, even though there is an unlimited amount of people who would rent one if they could.
There is a limited number of suitable restaurants that will take large reservations, especially on short notice.
opportunity cost relates to the economics of prom because most students attending prom are on a budget. The more money they put towards a dress, the less money they have to put towards shoes, dinner, and transportation. Therefore, they are giving up a limo and fancy shoes, in order to obtain a more expensive dress (for example). When attending prom, many choices must be made and as a result opportunity costs will arise.
Supply relates to the economics of attending prom because it determines what is available to consumers. For example, the supply of dresses in an area will determine the amount of options consumers have. A lack of supply in dresses may cause consumers to be willing to pay higher prices. Problems can arise if there is not enough supply to meet the large demand of individuals attending prom.
Demand relates to the economics of attending prom because it can determine how much prom attire and necessities are produced. If the demand exceeds the available supply of prom attire, scarcity will result. DEmand may also influence how quickly stores carrying prom clothing sell out and become limited on supply.
Disequilibrium relates to the economics of prom because it means that supply and demand are no longer equal at the current market price. This indicates that scarcity or a shortage may occur. This could also determine that supply exceeds demand and there is a greater amount of prom goods in stores than people are actually willing to buy.
externalities relate to the economics of prom in many ways. Dresses and shoes are often produced in developing countries that practice child labor, and therefore child labor and harm, as well as pollution is an example of a negative externality. Many third party effects can arise from an individual attending prom.
Taxes relate to the economics of attending prom because they can cause an increase in the prices of dresses, suits, and even transportation. High rates of tax can limit the amount of consumer surplus and reduce an individuals purchasing power. Taxes can make goods more expensive to consumers than they expected.