Economist want to base their explanation
of how much people want to buy on the foundation
costs and benefits.
habit and fad.
manipulation of people by marketers.
Mary is having the yard sale and is
willing to sell a painting if she gets at least $2, but
she has not marked a price on it. John is at her sale and
willing to pay up to $100 for this painting. What can
economic theory tell us about the price that will
It will be $51, half way between the
values that Mary and John place on the painting.
There will be no sale because these
two values are too far apart.
If there is a sale, the price will be
somewhere between $2 and $100.
Nothing; economic theory can only explain markets with
many buyers and many sellers.