Because the destruction was so terrible, some people called World War I “the war to end all wars.” However, this was not the case as we would see over the next several decades. 
Following WWI, people in the United States choose how they would spend their money they had earned during the war.  War often stimulates an economy. This was very apparent after World War I. Factors such as price, convenience, and good/service influenced their decisions much as it does ours today. 
(Side note: Businesses have to make economic decisions, too. They take notice of which products are selling well and which are not. Americans are free to buy, and American businesses are free to sell, what they want. This is the principal behind a capitalist free enterprise system.) 
American consumers (buyers) throughout the 1920s bought products and services from businesses. These businesses or producers determined the kinds, the amounts, and the price of goods based on what consumers were willing to pay and buy. A market is all the potential customers for a particular product or service. The US government does not plan for the nation’s economy, but it make laws and regulations that limit freedoms. 
(Side note: The law of supply says that if prices are high, suppliers will make more products for the market. Prices go up if the demand is greater than the supply.   This can also lead to scarcity. Scarcity means that the demand for the item is much greater than the supply. The amount of goods or services consumers are willing to buy at a certain price at a given time is called demand. If people prefer beef over chicken, then demand is higher for beef. This gives producers an incentive to have beef available.) 
Sometimes the government steps in to control price and production in the form of subsidies, or money assistance. Two things determine the price of goods. One is the consumers’ demand for the goods and the other is the supply or the amount of goods and services available. During the 1920s the government set very little limits or regulations in the market which allowed consumers to buy and purchase goods at their leisure. The government even allowed consumers to purchase stocks on margin or as we commonly know today as credit. This proved costly when the stock market suddenly crashed in 1929 leaving many with unpaid debts and high interest to pay.
How a price change affects supply or demand is called elasticity. The supply and demand of certain products are either elastic or inelastic. Elastic demand means that a change in price affects the number of people who will buy the product. Inelastic demand means if a price changes it does not affect the number of people who buy it.
The early 1920s was a time of lavish spending and good times. However, by the end of the 1920s the United States along with the rest of the world was sent into a severe worldwide economic depression that lasted well into the 1930s. This time period became known as the Great Depression. 
Inflation, or a rise in prices relative to money available set in. Unemployment, the measure of the number of unemployed persons in the United States became an additional factor leading to the economic problems. If the unemployment rate is high, the economy is not growing, because jobs are being lost instead of gained. If the unemployment rate is low, the economy is growing. Families were forced to make hard decisions each involving an economic opportunity cost. Opportunity cost is the cost of choosing one thing over another. For example, as a result of buying a new winter coat, a shopper may have less money for new boots. The opportunity cost of buying the new winter coat would be the new boots. Often times we think of opportunity cost as a trade-off.

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