Economics Economics is the study of choice and behavior towards scarcity. It is concerned with people’s efforts to utilize scarce resources to maintain their lives by their perceived needs and ambitions. People have unlimited wants but the resources available to satisfy them are scarce. A rational consumer will always prefer more for less but will always be constrained by the available resources (Mankiw, 1990). Scarcity, therefore, constitutes the biggest economic problem. Due to scarcity of resources people have to make choices and in making these choices, they must consider the opportunity cost of having one thing for another. Life presents us with three major economic problems: what to produce, how to produce, and for whom to produce. Microeconomics It is the study of economic behavior and decisions of individual households. These individual households could be firms or families. It tends to examine how these behaviors affect the demand and supply of goods and services in an economy. It is largely concerned with the allocation of scarce resources and the elasticity of producers and consumers at the household level. Firms for example need to understand the demand and supply of their products properly to come up with the appropriate pricing strategy. They have to know accurately the complementary and substitute products that exist for their goods and services in the market. Law of supply The law of supply states that holding other factors constant, a price rise will lead to an increase in the amount of quantity supplied and vice versa. The rise in the price of a commodity acts as an incentive for suppliers to produce more to optimize their profits. Fig. 1: Supply curve When price increases from p 0 to p 2 , output increases from q 0 to q 2 while a decrease in price from p 0 to p 1 causes a decrease in output from q 0 to q 1. The law of demand The law states that as the price of a commodity increases people will substitute more and more of that commodity for another. As the price increases, people tend to forego the consumption of that commodity up to a level in price where they completely switch to the substitute commodity. Simply put, the higher the price of a commodity the lower its demand and vice versa. Fig. 2: Demand curve An increase in price from p0 to p2 leads to a consecutive decrease in quantity demanded from q0 to q1. On the other hand, a decrease in price from p0 to p1 leads to an increase in quantity demanded from q0 to q2. Factors causing a change in supply in Orange County Change in technology There has been a huge technological revolution in Orange County leading to efficiency in production and high standards of living. These range from computers, fax services, internet services, satellite broadcasting, and online data banks. These have reduced the cost of production of goods and services by increasing efficiency in production. As result firms can produce more at minimal cost hence boosting the supply of goods and services in the market. Venkatesh (1990) observes that the availability of an elaborate credit system which is manifested by the easy accessibility of home mortgages, automobile loans, and credit cards has also boosted demand for housing and automobiles. This has consequently led to a sharp increase in the supply of housing and automobiles in the county. Production efficiency has further led to a marked increase in the supply of goods and services in this market. Due to adv