Threhold Price Paradox
Threshold Price Paradox: Production requires time which is limited. People are willing to supply at a threshold price or above, but people are unable to demand at that price due to the lack of money. If the price is at the threshold, supply will go on increasing. For example, in case of teacher, if their salary is 20,000 most are likely to hold a job, but below the threshold say 10,000 most are unlikely to join as teacher. How will the perfect competition solve it? Because in this condition, competition will never push the prices down below the threshold, or if employees agree with little (at below threshold price) due to unemployment but it makes them unproductive in work as well as life. In this condition most of the people demand are never met. In case of teacher, no competition will decrease the price, because taking a class requires about 6 hours of preparation daily. If teachers agree with salary less than 20,000, then they will compromise their time in pre...