Dr Sam Wylie

I'm thinking of flying from Perth to Melbourne.

Should I fly on Virgin or should I fly on Qantas?

Well, maybe I should go to the Gold Coast instead.

And in making those choices, I'm looking at prices, aren't I?

And everyone's looking at the same prices and making their own choices.

So it's the prices that are coordinating all those individual choices and setting supply and demand equal to each other.

It's a big topic.

It's hard to explain just by waving your hand.

Well, unless there's something preventing it from happening, you know, it's like water.

It'll just flow to the same level.

Unless there's some sort of impediment in the market that is stopping supply and demand from coming together, then that will happen automatically.

Now, there's lots of things that can go wrong in markets.

And so sometimes the government has to intervene in the market.

So like minimum wages, for instance.

So when the demand for people to wash dishes and to wait tables, when that demand goes way down in the COVID-19 crisis, it doesn't mean that restaurateurs can charge whatever they want.

You know, you can't, you can't, so pay whatever they want.

You can't pay people less than the minimum wage.

So there's, and that's the government intervening in the labor market just to establish a level of fairness and to prevent, and just to make sure that there's a balance in power here between employees and employers.

And so it doesn't just reach its own equilibrium, its own sort of balance between supply and demand.

The government intervenes.