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Unformatted text preview: to meet the quantity
demanded at zero price at 8 a.m. The problem of freeway congestion is solved.
If more people carpool, then for all practical purposes the demand for freeway space Offshoring
In 2003, the McKinsey Global
Institute calculated that offshoring (U.S. companies hiring
workers in other countries) came
with both costs and benefits but
that overall the benefits were greater
than costs. One benefit, especially noted,
was lower costs for U.S. companies.
How might lower costs for U.S. companies affect both the supply of goods in
the United States and the prices customers pay for
THINKING falls as in Exhibit 6-7(c). In other words, if
people carpool to such an extent that the
demand for driving on the freeway drops by
as much as shown in the exhibit, then freeway space is able to meet the quantity
demanded at zero price at 8 a.m. The shortage of freeway space again is eliminated.
Of course, as is probably evident now, a
third way can be used to get rid of freeway
congestion. It has nothing to do with building more freeways or carpooling. Freeway
congestion can be eliminated by charging
tolls. The tolls bring the freeway market into
equilibrium. In other words, as shown in
Exhibit 6-7(a), a toll of $1.50 would eliminate freeway congestion at 8 a.m. Supply and Demand
on the Gridiron What factors determine how hard this
player has to work and how skilled he has
to be to win a position on the team? Suppose you want to try out for a high
school sport, such as football, volleyball, or
golf. How competitive do you have to be to
get on the team? It depends on how many
open positions are available on the team you
want to try out for, as well as how many
people are going to try out for those positions. How competitive you must be is a
matter of the supply of positions and the
demand for positions.
Suppose you want to try out for tight end
on the high school football team. The team’s
coach has decided that he will have three
tight ends on the team. In economic terms,
Section 2 Supply and Demand in Everyday Life 145 06 (128-153) EMC Chap 06 11/21/...
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This document was uploaded on 01/16/2014.
- Winter '14