Supply and Demand, Considered Together
Why Gasoline Is $4 a Gallon—or Isn’t
To repeat: we live in a world of scarcity, so no one can have everything he wants. Some procedures have to be found to decide how resources will be used and who will get how much of the resulting output. One way to do that is the market, to whose workings I now turn.
It is first necessary to take our two curves, supply and demand, and place them in the same space, as shown in Figure 3-1.
Figure 3-1. Price below equilibrium
The supply of and demand for actions ...