It's easy to hold the supply curve fix and rotate the demand curve and draw conclusions from it. What if we hold the demand curve fix and rotate the supply curve? From that, we can conclude that that shortage is a function of the queue line.
Ty --- Alex Tabarrok <[EMAIL PROTECTED]> wrote: > Seth Giertz wrote:> > >... for a given supply curve and given demand > curve, the > > shortage is greater the lower the price ceiling. > > > > And, as the price ceiling is lowered, both the > size of the shortage and > > the queue increase > > > Yes; that is precisely why people are misled! > > What the analysis indicates is that the increase in > the shortage is > *not* what makes the queue longer even though both > the shortage and the > queue typically increase as the controlled price > falls. Indeed, it is > not hard to draw supply and demand curves where the > queue gets *much* > longer as the controlled price falls while the > shortage increases only > slightly or (in the limit) not at all. Just draw > the supply and demand > curves so they become more inelastic the lower the > price. > > Alex > -- > Dr. Alexander Tabarrok > Vice President and Director of Research > The Independent Institute > 100 Swan Way > Oakland, CA, 94621-1428 > Tel. 510-632-1366, FAX: 510-568-6040 > Email: [EMAIL PROTECTED] __________________________________________________ Do You Yahoo!? Make a great connection at Yahoo! Personals. http://personals.yahoo.com
