Supply and Demand

At the heart of economics and Black Economics is the idea of supply and demand. In free markets, the price accurately reflects what people are willing to pay. For example the retail gasoline market is a relatively free market. There are lots of competitors. No one gas station or retailer controls more than 20% of the market. The largest retails gas company is XXX. Their are lots of buyers.

As the price rises the demand for gas falls. It falls for two reasons. People have fixed incomes, say $100 a months for gas, so if the price rises that can afford less gas. Second reason is that people substitute other things for gas, like walking, taking the bus or staying at home and watching TV.

The same thing happens when the price falls. When the price of cantaloupe at the market is $1.00 instead of #2.00 I buy twice as much for the same amount of money.