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- In what sense did Christy's
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Card 14 / 100: In what sense did Christy's arrival "knock out" some of the possible equilibrium prices that could have formed between Alice and Billy?
Answer:
All we mean is that Christy would be willing to make counteroffers to prevent some of the original equilibrium trading outcomes from occurring. Intuitively, Alice wouldn't sell Snickers at such low prices to Billy once Christy enters the scene with her stockpile of Milky Ways and her tendency to prefer Snickers.
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Dr.Robert MurphyAssociated Scholar
Mises Institute
USA
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Attribution:
Dr. Robert P. Murphy, Lessons for the Young Economist. (Mises Institute), http://mises.org/document/6215/Lessons-for-the-Young-Economist (Accessed 04 April, 2014). License: Creative Commons BY
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