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Unformatted text preview: made no change in supply, so they're selling the amount for a lower price. The final price mediates itself and the consumers are getting a better price over all. 4. In the northern economy we have cheap fruit and in the southern economy expensive fruit. If we built a bridge the flow would be from north to south, because people would like to buy cheaper fruit. The effect to that would be a price increase in the north (fewer products- more demand- higher price) and a price decrease in the south (vise versa). 5. In order for the suppliers to earn money by producing smaller amount than the equilibrium point we need to make the percentage of price change bigger than the percentage of quantity change. And that would mean that the elasticity in that area is smaller than one....
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This note was uploaded on 10/25/2009 for the course BUSINESS 772 taught by Professor Sadeh during the Spring '07 term at Interdisciplinary Center Herzliya.
- Spring '07