The higher the demand relative to supply the higher

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Unformatted text preview: rice of oranges, apples, or TV sets is. It follows, then, that for someone to receive a high wage, demand must be high and supply low. The higher the demand relative to supply, the higher the wage will be. To earn a high wage, then, is to perform a job in great demand that not many other people can do. If few know how to do it, supply will be low. Low supply combined with high demand means you will receive a (relatively) high wage. Consider the wage of a restaurant server versus a computer scientist. The demand is great for both servers and computer scien- Reviewing Facts and Concepts 1. A freeway sometimes experiences traffic congestion (bumper-tobumper traffic) and sometimes very little traffic. Explain why. 2. Housing prices are higher in city X than in city Y. Using the concepts of supply and demand, explain why. 3. Identify whether a shortage, a surplus, or equilibrium exists in the following settings: a. Fewer students apply for the first-year class at college X than spaces available. b. People who wanted to attend a baseball tists. However, a large supply of servers and a not-so-large supply of computer scientists mean that computer scientists earn more than servers. Whether your future occupation is auto mechanic, teacher, doctor, or anything else, your income will be determined by supply and demand. Can you explain how supply and demand impact wages? In 2005, Randy Johnson was a pitcher for the New York Yankees. His salary that year was $15,419,815. Why was his salary so high? The answer: high demand, low supply. The demand to watch a good pitcher play in a baseball game is high. The number of people in the world who can pitch a baseball the way Randy Johnson pitches is small. High demand and low supply is the winning combination for a high salary. EXAMPLE: game were told that tickets had sold out the day before. c. Houses for sale used to stay on the market for two months before they were sold. Now they are staying on the market for up to six months, and they still aren’t sellin...
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This document was uploaded on 01/16/2014.

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