THE INTERACTION OF SUPPLY AND DEMAND IN TODAYÆS AIR PASSENGER INDUSTRY
If one searched diligently, one could find dozens of definitions of the word ôeconomicsö or of the concept of ôeconomicsö. The most widely accepted and used definition of economics as an academic discipline is the one provided by Paul Samuelson.
Economics is the study of how men and society end up choosing, with or without the use of money, to employ scarce productive resources that would have alternative uses, to produce various commodities and distribute them for consumption, now or in the future, among various people and groups in society. (Samuelson, in Samuelson & Puttaswamaiah, 2002)
The term ôscarce productive resourcesö in economics refers to some factor that is not characterized by unlimited supply. When there is limited availability of a factor, decisions are required in relation to the way in which the resource should be used. In some rare instances, there are finite quantities of a resource. In most instances, however, the quantities of a resource that are available depend upon interactions between (a) how difficult it is to make the resource accessible and usable to people and (b) how badly people want the resource for use in their lives. Such interactions reflect the functioning of the concepts of supply and demand (Case & Fair, 2002).
At a basic level, when the demand for a product is high, people may be willing to pay somewhat more for the product. In turn, when people are willing to pay more for a product, the people who make those products are more willing to expend the effort to make more of them. If they make too many of the product, however, there will be more than are demanded, and the price will fall. At this basic level, such see-sawing could go on forever. In most cases, however, there are limits to what people are willing to pay for specific products, and there are limits to production levels that can be attained...