Say we have a supply and demand relationship, in which the demand curve does not intersect with the supply curve and the demand curve is situated above the supply curve. What phenomenon describes such a relationship, does such a phenomenon exist?

I was thinking maybe country $A$ has regulations in place such that suppliers cannot sell product $a$ for more than some amount $S$. Maybe there is an ethical issue such as underpaid staff associated with the production of the item, so consumers will not buy $a$ at such a low price. However this seems quite far fetched and I don't know whether such a scenario exists.

  • $\begingroup$ Not sure why you call this a "non-viable industry". $\endgroup$ – Giskard Sep 6 at 19:07

If we consider that no one wants an infinite number of any material thing other people can supply and that there are only a finite number of people/firms, the demand function should be bounded. That means that eventually the price people are willing to pay for one extra unit of the good will be zero, and assuming non-negative production costs at this point the supply curve will not be under the demand curve. So the situation you describe can only exist in theory.

However you can have examples where for large quantities the demand function is over the supply function, e.g., the market for ordinary air. People desperately need air (up to a limit), yet it can be supplied at zero cost (it is freely available, again up to a limit).

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