The first time someone reads the title “Cocktail Party,” one might assume that it is a book about how to make different drinks. Don’t let the title fool you. Despite its deceptive title, Cocktail Party is a book that looks at varies aspects of economic. The first five chapters discuss the concepts of value, exchange, scarcity, comparative advantage and production. All of these concepts are very important should one wish to have a good understanding of the supply, demand and equilibrium concepts. Scarcity is the idea that there is a limit on supply but demand for something is unlimited. This concept is important in understanding supply and demand because companies attempt to reach a price in which the amount of good supplied is equal to…show more content… Exchange is the idea of giving up a certain amount of one thing in order to obtain something else. Most of the time money is exchanged for a good; however, goods can also be exchanged for other goods. This is known as bartering. Exchange is important for understanding supply and demand because without exchanging there is no way in which goods are passed from person to person, and there would be no demand for goods as they are impossible to obtain. Also, there would be no supply because companies are not accumulating capital in order to produce goods. Also, without supply and demand there would be no equilibrium…show more content… Comparative advantage is when a country can produce a certain good at a lower opportunity cost than another country. Countries specialize in producing goods that they produce efficiently and then they trade goods with other countries in order to obtain goods that they produce less efficiently. This relates to supply and demand because it causes the market to be more efficient by lowering the opportunity cost to produce certain goods. This causes the consumer to benefit also. The gains from trade directly impact equilibrium price. If countries specialize and trade their supply will increase. This will in turn lower the equilibrium price and increase the quantity