Applied economics

VI. EVALUATION/ACTIVITIES: Exercise 1: Directions: Let's analyze this passage. This will help you understand our new topic on demand, supply and equilibrium. Please read carefully the passage and answer the question below. In some cultures, romance isn't nearly as important as cash when it comes to choosing a marriage partner. And even when money plays no explicit role in selecting a mate, courtship customs are governed by the venerable economic model of supply and demand. Under the dowry system in India, for example, parents of older brides would typically pay more to prospective grooms. Men with better jobs would receive larger payments, too. In short, there really is a marriage market in many countries around the world, and economic principles apply to it. In markets with a preponderance of women seeking partners, the terms of trade shift in favor of men. If more men are seeking partners, the reverse is true. Under the dowry system in India, a market with more women seeking partners, the trade shift favors the men. What law or economic principle is applicable? 2. In the same system, men with better jobs receive larger payments. What economic principle is applicable to this situation? Justify your answer. State the law of demand. State the law of supply