Look at These Prices!: Introduction
As the saying goes, “Everything has a price.” The question for anyone trying to understand our economy is, “Why that particular price?”
In Supply, Demand, and the Invisible Hand we saw how supply and demand interact in the market so that the “right” amount of goods and services is produced. That section also introduced the price mechanism and its role in determining supply and demand. In this section, we learn how the consumer's need for a product affects demand and how market interventions, such as sales taxes and rent control, affect supply, demand, and prices.
Excerpted from The Complete Idiot's Guide to Economics © 2003 by Tom Gorman. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.