The Basic Concepts For Economic Reasoning
Will Bury is an inventor and entrepreneur who is considering launching a new technology that would create digitized books. Will’s goal of transforming the way consumers listen to printed word can be achieved through diligent planning and appropriate allocation of all resources. An idea can only grow as high as its creator is willing to invest in its success. “… entrepreneur takes the initiative in combining the resources of land, capital, and labor to produce a good or a service.” (McConnell & Brue, 2005, page 23) Although Will is in the primary stage of developing this product, he must consider fundamental economic principles in his initial analysis in order start his company with sound business decisions. Several economic concepts are found throughout the Will Bury Scenario; this paper will discuss how the Law of Demand and Opportunity Cost are related to Mr. Bury’s business decisions.
Law of Demand
One fundamental economic concept that Will has considered is the Law of Demand. His initial research concluded the competition sells goods at a rate of $20.00 per 500 page book. Will determined he would be more competitive by selling his audio books at a rate of $15.00 for copyrighted books and $10.00 for titles in which the copyright is lapsed. This thought process falls in line with the law of demand, which states that as prices fall, people tend to purchase more of a product. “The law of demand is consistent with common sense. People ordinarily do buy more of a product at a low price than at a high price.” (McConnell & Brue, 2005, page 40) Price is an obstacle that deters consumers from buying. The higher that obstacle, the less of a product they will buy; the lower the price obstacle, the more they will buy.
Opportunity Cost
Another economic concept that Will Bury must consider when deciding how much time to