Economics

To understand harm gouging , one needs to look at the publish and demand model . The supply-demand model is one of the implicit in(p) concepts of economics . The price level of a good fundamentally is determined by the point at which measure supplied equals criterion demanded . To illustrate , consider the following case in which the supply and demand curves are plotted on the same graphSupply and contract On this graph , in that respect is only one price level at which bill demanded is in balance with the quantity supplied , and that price is the point at which the supply and demand curves crossThe honor of supply and demand predicts that the price level will bear on toward the point that equalizes quantities supplied and demanded . To understand why this must be the equilibrium point , consider the situation in which the price is high than the price at which the curves cross .

In such a case , the quantity supplied would be greater than the quantity demanded and in that location would be a surplus of the good on the market place . Specifically , from the graph we see that if the unit price is 3 (assuming relative pricing in dollars , the quantities supplied and demanded would beQuantity Supplied 42 unitsQuantity Demanded 26 unitsTherefore there would be a surplus of 42 - 26 16 units . The sellers then would lower their price in to sell the surplusSuppose the sellers lower their prices below the equilibrium point . In this case , the quantity demanded would increase beyond...

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