> Rama has ten mangoes with which he wants to earn fifteen annas. Krishna wants only four mangoes. How much will Krishna have to pay?
If Rama has a transactional perspective on business and has the local monopoly on mangoes, and Krishna really needs mangoes right now and will accept no substitute, Krishna might have to pay fifteen annas for four mangoes. Or maybe one hundred annas per mango. Or one thousand. Is there any limit?
If there are competing mango vendors who are offering five mangoes for five annas, Rama may have difficulty convincing Krishna to pay more than four annas for four mangoes.
If Rama expects that competing mango vendors will run out of stock early, but some customers are likely to still come toward the end of the day, Rama's price per mango may depend upon the time of day - it may remain quite high throughout the day compared to other vendors and perhaps only drop if Rama fears ending the day without selling all the stock.
I remember the first story my (baby) economics professor told me:
A local gas station changed gas prices to above a dollar and got a visit from the Sheriff's office. The demand was simple: you can either continue to charge ninety nine cents or you can close the pump. However, due to a chance of public unrest, you may not charge a dollar or more at this time.
What the professor didn't have to say is that in real life local authorities have incredible latitude and we must comply at least while we "work the courts". I think the morale was that free enterprise doesn't exist anywhere in real life and probably for good reason.
If Rama has a transactional perspective on business and has the local monopoly on mangoes, and Krishna really needs mangoes right now and will accept no substitute, Krishna might have to pay fifteen annas for four mangoes. Or maybe one hundred annas per mango. Or one thousand. Is there any limit?
If there are competing mango vendors who are offering five mangoes for five annas, Rama may have difficulty convincing Krishna to pay more than four annas for four mangoes.
If Rama expects that competing mango vendors will run out of stock early, but some customers are likely to still come toward the end of the day, Rama's price per mango may depend upon the time of day - it may remain quite high throughout the day compared to other vendors and perhaps only drop if Rama fears ending the day without selling all the stock.