4 ms·

1) No, price in any market is as high as buyers of this market can afford. 2) No, employers are not so naïve :) Everybody understand who you can hire for $5/ho

1) No, price in any market is as high as buyers of this market can afford. 2) No, employers are not so naïve :) Everybody understand who you can hire for $5/hour and what to expect. I'm not interested in such employers and they are not interested in me, so it's just not my part of market and I don't care. As employer (sometimes I'm employer) I have to filter out people with low bids without even reading their profiles. I know what to expect from low price.

dragonwriter 12y ago
> No, price in any market is as high as buyers of this market can afford. If market clearing price is set only by what buyers are willing to pay and not by costs, you have a monopolistic market in which rents are being extracted, not an efficient competitive market. If market clearing price is set only by sellers costs and not what buyers are willing to pay, you have the reverse case, where you have a monopoly buyer. In an ideal competitive market, the price a buyer is willing to pay to buy the next unit is set by the expected benefit buying another unit brings them, and the price a seller is willing to sell the next unit for is equal to the seller's cost (including opportunity cost) of providing the next unit, and the market clearing price is the price at which the number of buyers willing to pay that price or more is equal the number of sellers willing to sell at that price or less, and buyers only willing to pay less and sellers only willing to sell for more are priced out of the market.