Chapter5 Additional Insights

Chapter5 Additional Insights - satisfied. There is no need...

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Chapter 5: Using Supply and Demand This chapter is divided into two parts. The first part of the chapter applies market analysis (demand, supply, and price adjustments) to real-life scenarios. Read through the scenarios but do not get caught up in the details of the particular scenarios…just follow the steps in the market adjustment. The second part of the chapter looks at different ways in which the government sometimes intervenes in a market. Recall that the buyer(s) and seller(s) in a market participate voluntarily, expressing their values through prices. Market forces will adjust price to bring the buyer(s) and seller(s) to equilibrium, where both parties will be
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Unformatted text preview: satisfied. There is no need for the government to participate. However, the government sometimes intervenes because it feels that it should benefit either the buyer(s) or the seller(s). When the government intervenes, equilibrium is prevented from being reached and we just have to accept it. Please read the sections on price ceilings, price floors, quantity restrictions, and third-party-payer markets. These are situations that we are familiar with and it is interesting to interpret them from an economic view....
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