The academic field of economics is sometimes referred to as the holy social science. This is partly because its mission is to explain human behavior in terms of how money is earned and deployed. A dictionary definition for economics is "having to do with 1) the management of production, distribution and consumption of wealth, and 2) the management of income, expenditures, etc. of a household, private business, community or government."1 Many economists have sizable egos, and some of them place the position of their profession well above their colleagues in the fields of financial and managerial accounting. However, recent advances in theory and practices originating from the managerial accountants may cause the economists to reconsider whether they rank superior to accountants in the pecking order of management disciplines.
One of the fundamental concepts in economics describes the market price of a good or service as being determined by the quantity of both supply and demand for it. In 1890, the English economist Alfred Marshall published his famous work, Principles of Economics, and many of us remember Marshall's graph that appeared in our college economics textbooks (see Figure 1).2 The graph displays two lines that cross as an "X" with the declining line representing customer demand and the ascending line supply. The intersection of the two lines denotes an equilibrium point toward which the market price will move to equalize the supply quantity to exactly match the demand quantity. Any higher price above this equilibrium creates a surplus where sellers would inevitably lower their price to sell more of the product. A lower price creates a shortage where sellers would increase price to earn more profit.
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