The law of supply and demand is much more general than what you might have learned in Econ 101. In fact it applies to just about any transaction between 2 or more human beings. Traditionally, it applies to the buyers and sellers of a product or service as follows. As the price of a product goes up, the demand for it goes down and vice versa. The more sellers there are, the more competition there is for buyers, and we would expect the price to go down and vice versa. If demand is low, the price should fall and, if demand is high, the price should rise. We see this in an extreme situation before or after a natural disaster when supply is low, demand is high and prices go sky high for certain products. This is also known as price gouging although there is no law against it in most states or at the Federal level. It is simply a function of an extreme case of the law of supply and demand.
A Service Example
Let us say I'm a window cleaner, and customers call and ask for an estimate on each job. After obtaining the relevant information, I quote them a price and they either say "Yea" or "Ney." How does the law of supply and demand affect this transaction?
1) Demand is seasonal so as the demand for my services increases during the summer months, my prices go up. Why? Because I can afford to lose some customers and still have plenty of work. Therefore, I select out the highest paying ones since the supply of my time and energy is limited.
2) If I am almost fully booked, I will estimate higher. Why? Again my time and energy is limited. I don't want to overwork. Therefore, after a certain amount of bookings, it's not worth taking an additional job unless I get more money for it. By the same token, if I'm desperate and need the money, I can't afford to have a customer go elsewhere so I will bid low hoping to secure that customer.
3) If I lose too many jobs that I want, I'm going to lower my bids or estimates. If I am getting more work than I need, I'm going to raise my bids or estimates so as to maximize my income based on the work week I want to put in.
Sex and the Law of supply and Demand
Sex is a transaction between 2 human beings. How is it affected by the law of supply and demand? Well, the person who wants it more has to be willing to put more into it than the person who wants it less. This also is known as courtship. It also accounts for prostitution. Young men in general want sex more than young women. So they put more into it in the sense of paying for the wining and dining. The woman views the situation in terms of how much is this guy willing to give and is it worth it to me to do this transaction based on what I'm getting. This is why rich guys tend to get beautiful women.
With prostitution the financial transaction is obvious. Since there aren't many women willing to pay for sex, it's obvious that men want sex more than women.
In fact a generalization of the law of supply and demand could be stated as follows: in any transaction between 2 people, the one who wants the transaction less controls the transaction. Since young women want sex less than young men, they are in control of the transaction. Even in an economic transaction, if the seller desperately needs to sell, the buyer is in control. This is known as a buyer's market. And vice versa.
An interesting point is how do dowrys fit into this analysis? The woman's family is paying the man extra in order to get him to take the woman as his bride. Doesn't this contradict the sexual transaction described earlier? Well, no, because this is really a family to family transaction and not strictly a sexual transaction. The bride's family wants their daughter to marry into the groom's family. Presumably the groom will be providing her a living for the rest of her life, and, in order to motivate the groom to take the bride, a dowry is provided. Presumably, the uglier the bride, the bigger the dowry would have to be as an inducement.
In the western world the prospective bride is really in control since, as an inducement to marry him, the groom offers her a diamond ring. Obviously the man wants the woman more than she wants him or else no financial inducements as in courtship and wedding rings would be necessary.
Since in general men's sexual energy wanes as they get older and women's waxes, the transactional situation changes between older people. Women sometimes take over the courting role especially with younger men. Older men tend to gain control in the relationship as women want sex more than they do.
So the law of supply and demand is a force of nature applying to any human transaction. Even children make bargains like: I'll let you play with my toy if you do this or that for me. Although the law of supply and demand is natural, we might ask is it ethical? Is it ethical that the person who needs something less is in control of the transaction with a person who needs something more? Shouldn't the neediest person be served rather than the interests of the person who could care less?
That's why institutions exist, supposedly: to mitigate the inherent unfairness and inhumanity of the law of supply and demand.
