Friday, February 09, 2007
Econs Lesson at the Swimming Pool
Just got back from the pool. While sun tanning, I saw a scenario that resembles a perfectly competitive market. Meaning, there's only 1 company supplying 1 product.
In my case in the swimming pool, the product (supply) was a girl in white bikini, lying in the pool sun bathing. Now, to the demand side, all the guys sun tanning in the pool. As you can see, there's obviously an excess demand. And according to theory, in a perfectly competitive market, consumers (guys in pool) are supposed to take the price set by the company, in other words the dudes got no chance to bargain. Since she's the only good in the pool, she set herself as priceless. Hahaha.. So all the dudes can just admire from their place.
Likewise for all economy, there's always an unexpected occurrence. Economists term it as supply shock, meaning a negative piece of news that influences the market. All of sudden this bunch of kids who were learning swimming invaded the kids' pool where the girl was lying in. These kids started playing happily, kicking water and throwing balls. The girl got no choice but to leave the pool, pack her stuffs and left. So this supply shock had effectively shifted the supply curve to the left and thus the supply drop to zero. Without supply, demand is as good as nothing.
In the end, the guys just reverted back to their 'sun-tanation'.
Anyway, for people who dont understand what the hell I'm talking about, it simply means that I went sun tan today, there's a babe in white bikini and everybody was looking at her. The fun ends when all the kids came to the pool, where the babe was, and started having a party of their own.
3:04 PM;
my story
