Economics Assignment: Price Analysis, Demand and Supply Dynamics

This economics assignment delves into the critical role of prices in reflecting and responding to economic shocks, particularly in the context of the COVID-19 pandemic. The assignment examines how price fluctuations serve as a key indicator of changes in both demand and supply. The student's work explores the impact of the pandemic on aggregate demand and supply, illustrating how factors such as lockdowns and supply chain disruptions influence price levels. The assignment uses economic models to analyze the relationship between prices, demand, and supply, providing a framework for understanding economic phenomena such as stagflation. Furthermore, it emphasizes how price analysis is fundamental for businesses to assess profitability and make informed decisions. This assignment highlights the importance of price as a central concept in both micro and macro economics, offering insights into how economic models and practical applications are connected.

ECONOMIC PRINCIPLES
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Contents
Contents...........................................................................................................................................2
TASK 1............................................................................................................................................3
Explanation of why prices are effective tool for compare the relative magnitudes of the supply
shock and demand shock.............................................................................................................3
REFRENCES...................................................................................................................................5
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TASK 1
Explanation of why prices are effective tool for compare the relative magnitudes of the supply
shock and demand shock
At present time the whole world economy is suffers from COVID-19 pandemic it will directly
effect the demand and supply curve of the economy. TO compare the magnitude of the changes
in shocks of demand and supply price has been taken a it is the essential source of income and
running of an economy. The entire economist developed their models on the basis of price value.
As per the model of Keynes, aggregate demand and aggregate supply curve depend on prices as
principles of macro and micro economics also depends on prices.
Graph 1Model of aggregate demand and supply.
Due to COVID 19 factories, industries an shapes are shutting down ,peoples get quarantine they
are not able to purchase any products thus according to the model aggregate demand curve
changes when consumers demand increase and it will decreases when consumers demand goes
down on the other side when prices increases when shortage of supply of product then aggregate
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supply changes and it is the situation of negative shocks(Mazzoni, Heggy and Scabbia, 2018).
At ht present time the demand of essential items increases but prices also goes high due to
shortage of supply it is the situation of stagflation when the economic growth down. Price is the
only medium to find out the changes as profit , loss of organizations depend on the pricing value
of any products.
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REFRENCES
Books and journals
Mazzoni, A., Heggy, E. and Scabbia, G., 2018. Forecasting water budget deficits and
groundwater depletion in the main fossil aquifer systems in North Africa and the Arabian
Peninsula. Global environmental change, 53, pp.157-173.
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