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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
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,
3. Identify whether a shortage, a surplus, or equilibrium exists in the
a. Fewer students apply
for the first-year class
at college X than
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
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
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This document was uploaded on 01/16/2014.
- Winter '14