Lecture_Microeconomics_Chapter4

Lecture_Microeconomics_Chapter4 - Demand and Supply...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
4 Demand and Supply Applications
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
THE PRICE SYSTEM: RATIONING AND ALLOCATING RESOURCES price rationing The process by which the market system allocates goods and services to consumers when quantity demanded exceeds quantity supplied.
Background image of page 2
THE PRICE SYSTEM: RATIONING AND ALLOCATING RESOURCES FIGURE 4.1 The Market for Lobsters PRICE RATIONING
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
THE PRICE SYSTEM: RATIONING AND ALLOCATING RESOURCES When supply is fixed or something for sale is unique, its price is demand determined. Price is what the highest bidder is willing to pay. In 2004, the highest bidder was willing to pay $104.1 million for Picasso’s Boy with a Pipe .
Background image of page 4
THE PRICE SYSTEM: RATIONING AND ALLOCATING RESOURCES FIGURE 4.2 Market for a Rare Painting
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
THE PRICE SYSTEM: RATIONING AND ALLOCATING RESOURCES CONSTRAINTS ON THE MARKET AND ALTERNATIVE RATIONING MECHANISMS On occasion, both governments and private firms decide to use some mechanism other than the market system to ration an item for which there is excess demand at the current price. Regardless of the rationale, two things are clear:
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/30/2008 for the course ECON 2005 taught by Professor Zirkle during the Spring '07 term at Virginia Tech.

Page1 / 21

Lecture_Microeconomics_Chapter4 - Demand and Supply...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online