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    Using Economic Reasoning Power

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    Some economists did a study of the market for economists in Britain. They found that the quantity demanded was about 150 per year, and that the quantity supplied was about 300 per year. Using your new-found economic reasoning powers:

    - What did they predict would happen to the economists' salaries?
    - What likely happens to the excess economists?
    - Why doesn't the price change immediately to bring the quantity supplied and the quantity demanded into equilibrium?

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    Solution Preview

    Answer 1.
    Remember in a demand and supply schedule you have the quantity plotted on the x-axis and the price is on the y- axis. So, the only 2 factors you control is quantity and price. As, supply is double the demand; in order for the equilibrium to be established, the price should ...

    Solution Summary

    In a brief, but concise response of about 190 words, this solution discusses the concepts of supply and demand, substitution and equilibrium in economics. These responses are provided from the perspective of economic reasoning.