From classroom to a cocktail party, having knowledge in today's economy is definitely an asset when it comes to surviving in the world of business. Cocktail Party Economics, by Eveline Adomait, and Richard Maranta is undeniably satisfying as an economic training book, helping you understand the concepts of basic economics. The book brings to light many theories and thoughts, which are explained in a certain way that help readers easily, compare and relate them to each other. During the first couple chapters of the book, the main theories presented are scarcity, value, opportunity cost, production, and absolute/comparative advantage. Believe it or not, all of these theories are relatable to Supply and Demand; the two concepts introduced in chapters six and seven. .
Let's begin with the theory of Scarcity. The concept of demand is directly relatable to the scarcity of an item. Let's look at Jackson Pollock's work, for example. If only 20 paintings were available created by Jackson Pollock, there would be a much greater demand than if you could purchase them easily at your local art gallery. Supply can also be brought up in this situation; however the supply cannot be switched for this example, since Jackson Pollock died and is no longer able to supply more paintings, regardless of the high demand for them. To clarify scarcity, let's have a look at value. As I said before, because of the high demand, Jackson Pollock's paintings are valued in the millions of dollars. For instance, one of his paintings was sold in 2006 for over 100 million. This is partly because the amounts of Pollock's paintings are now fixed. However, the theory of scarcity is directed by more than the available fixed quantity. For example, the book strongly acknowledges that "scarcity also captures the idea of how many people want or value an item " (Chap 2, page 23). Pollock's paintings value has to do with the personal valuations placed on it by the potential buyers.