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CH 4 Supply and Demand

CH 4 Supply and Demand - What prices do they prefer...

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What prices do they prefer? Producers: P↑ Consumers: P↓ If sellers offer to pay lower, they would get deal What good is a high price if you can’t make a deal? Very ppl who intended to rip off buyers, competing prices downward In competitive marketplace, buyers realize sellers don’t have to sell to them If buyers offer to pay higher, they would get deal People who intended to rip off sellers w/ low prices, competing prices upward Instead of P↑ P↓ And no deals, we had P↓ P↑ If 20 rounds of the game, eventually prices would converge to a single number This number is called the market price or equilibrium price Invisible hand (market forces) Sellers that could not make a deal had higher production costs than those that did make one What incentive does this create? - find a way to lower costs why? - to be able to lower price and be able to sell Lowering costs thru efficiency? Buyers that could not make a deal had low buyer value than those who did make one Lower incomes: People with lower incomes typically have a lower standard of living.
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