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The decline in print news reading predates 2004. Print newspaper circulation peaked in 1973 and has declined since then due to competition from television and radio news. In 1991, 55% of Americans indicated they got their news from print sources, while only 29% did so in 2012. Radio news has followed a similar path in recent decades, with the share of Americans getting their news from radio declining from 54% in 1991 to 33% in 2012. Television news has held its own over the last 15 years, with a market share staying in the mid to upper fifties. What does this suggest for the future, given that two-thirds of Americans under 30 years old say they do not get their news from television at all?

The interconnections and speed of adjustment in real markets

In the real world, many factors that affect demand and supply can change all at once. For example, the demand for cars might increase because of rising incomes and population, and it might decrease because of rising gasoline prices (a complementary good). Likewise, the supply of cars might increase because of innovative new technologies that reduce the cost of car production, and it might decrease as a result of new government regulations requiring the installation of costly pollution-control technology.

Moreover, rising incomes and population or changes in gasoline prices will affect many markets, not just cars. How can an economist sort out all these interconnected events? The answer lies in the ceteris paribus    assumption. Look at how each economic event affects each market, one event at a time, holding all else constant. Then combine the analyses to see the net effect.

A combined example

The U.S. Postal Service is facing difficult challenges. Compensation for postal workers tends to increase most years due to cost-of-living increases. At the same time, more and more people are using email, text, and other digital message forms such as Facebook and Twitter to communicate with friends and others. What does this suggest about the continued viability of the Postal Service? [link] and the text below illustrates using the four-step analysis to answer this question.

Higher compensation for postal workers: a four-step analysis

This image has two panels. The one on the left shows the four step analysis of higher compensation for postal workers. The one on the right shows the four-step analysis of a change in tastes away from Postal Services.
(a) Higher labor compensation causes a leftward shift in the supply curve, a decrease in the equilibrium quantity, and an increase in the equilibrium price. (b) A change in tastes away from Postal Services causes a leftward shift in the demand curve, a decrease in the equilibrium quantity, and a decrease in the equilibrium price.

Since this problem involves two disturbances, we need two four-step analyses, the first to analyze the effects of higher compensation for postal workers, the second to analyze the effects of many people switching from “snailmail” to email and other digital messages.

[link] (a) shows the shift in supply discussed in the following steps.

Step 1. Draw a demand and supply model to illustrate what the market for the U.S. Postal Service looked like before this scenario starts. The demand curve D 0 and the supply curve S 0 show the original relationships.

Questions & Answers

Can it be possible to have two level of comparative advantage in a country ?
Louise Reply
.no.its not possible
Asanda
Why ?
Louise
why do oligopoly increase on the elastic segment of the demand curve
Tintswalo Reply
what is all about production possibility curve
Nice Reply
help me about the assumption of possibility curve
Nice
-The quantity and quality of economic resources are fixed. -only two types of goods can be produce out of this resources (that is,producer and consumer goods). -Resources are fully utilised. -The resources are mobile. -The state of technology is constant.
Louise
What is utility
chisom Reply
what is the meaning of money and inflation
Tinuke Reply
Money can be define as anything acceptable as a medium of exchange and mean of payment
Cynthia
what is a bar chart
Godwin Reply
what's economic
John Reply
Economics can be define as a study of how human beings make decisions in the face of scarcity it can also be define as using one wealth to make more wealth
Cynthia
Or in Nigerian way Economics is a science (social science) which studies human behavior as a relationship between Ends and Scarce which have alternative uses
Cynthia
what is the meaning of imperfect market structure
Hoyindamolah Reply
the theroy of demand
Tinuke
what is market economy
Jusu Reply
Market Economy:Is a system where the laws of supply and those demand direct the production of goods and services.
Iyabo
what is the meaning of money and inflation
Tinuke
what's demand in economics?
Abi Reply
Demand in economic is the good a consumer is willing or able to purchase at a particular time
Hoyindamolah
explanation of graph,bar chart,pie chart with examples
Abdulmojeed
4. Assume, after completing your economics class, you explain your friend that about 65% of GDP is spending on consumption. Your friend tells you that people are greedy and it is better for GDP if they spend on services or experiences. What would be your answer to your friend?
Javohir Reply
What is power
Ahmad Reply
how can I choose a model for analyzing primary data?
Dipsikha Reply
economics is science because it used sciencetific ways in solving it problem
Mhizz
Is economics a science, more expanciate
Saliman Reply
yh because it adopts scientific methods in research and analysis of economic issues
maame
Analyse Eskom in terms of the characteristics of a monopoly
Brilliant Reply

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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