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Questions tagged [supply-and-demand]

Supply and Demand is an economic model of price determination in a market. Demand refers to how much (quantity) of a product or service is desired by buyers. Supply represents how much the market can offer.

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How can we show that unreported employees are economically inefficient in this model?

Let's say a market (or a world) where there are only two groups of businesses (B_1 and B_2), and they don't have control over the price. There are limited and given number of employees (N). There ...
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Exponential Demand Function with application

I have seen the following demand function $q=a-p+c\bar{p}$ where $p$ is the price, $\bar{p}$ is the so called "average price". The values $a=1-c$ are competition parameters. I have basically two ...
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Demand Curve Equation Explanation

I've been reading (trying to brush up on my economics knowledge) and came across the equation: $q_D = a + b(P)$. The variable $a$ is explained as "factors other than price affecting demand." I read ...
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Finding the Equilibrium [closed]

Given that Y=C+I+G+NX, How am I to find the equilibrium level of income not knowing Yd? How do I even find the multiplier? C = 2000 + 0.9Yd T = 0.25Y I = 400 G = 800 X = 200 IM = 0.15Y Best, T.
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Using capacity share instead of quantity market share in demand estimation (BLP)

If I were to use capacity share (as a proxy of quantity market share) in a demand estimation setup (such as BLP), are there ways to deal or interpret the measurement error? I would consider this ...
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What are some historical examples of effective supply-side policy? [closed]

What are some historical examples of effective supply-side policy?
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Exempting apparel from tartiffs [closed]

What are the arguments for exempting apparel from import tariffs but not cell phones and other consumer products?
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A Question About The Laws Of Demand [duplicate]

The law of demand holds that ceteris paribis, a decrease of demand can be caused by an increase in price. However, it is also true that when demand decreases, the price will decrease, it will fall. ...
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Why can't the Land-Value Tax (in some cases) be passed on to tenants?

According to https://en.wikipedia.org/wiki/Land_value_tax: Because the supply of land is essentially fixed, land rents depend on what tenants are prepared to pay, That doesn't make any sense. If ...
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Does it make economic sense for only some universities in a certain area to pay their sports scholars?

Apparently ‘Athletic scholarships are common in the United States, but in many countries they are rare or non-existent.’ But are there countries where there are some universities that offer sports ...
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Why slope is constant in demand/supply curve?

I was reading Mankiw and it showed variation of demand/supply curve with external factors. However, in all the cases the curves only shifted but didn't change in shape. What I am wondering is why the ...
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Is Bill Gates wrong about supply demand curves?

In a recent tweet (Aug 14th, 2018, reproduced below), Bill Gates said that supply demand curves don't work for software because the first unit costs a lot and every unit after that is free. Isn't this ...
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How can you model/simulate the price/value of a good?

Let's say that you have a good which price can change quite often because of its demand. Let's assume that you developed an algorithm that changes continuously the supply of the good to make its value ...
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Short run Aggregate supply curve is horizontal or positively sloped?

I want to understand the adjustment process from Very short run production decision to Short run production decision to Long run production decision. As far as I've understood: consider an increase in ...
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What is the difference between horizontal short run aggregate supply curve and positively sloped short run aggregate supply curve?

Both of these curves corresponds to short run then what assumption leads to first one and what leads to second one? For horizontal SRAS we say that in the short run when we have aggregate demand of ...
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Empiric evidence of abundance and post-scarcity either transition to it?

How much are concepts of post-scarcity and abundance economics just ideological/idealist or do we really observing their beginnings already? For example: healthcare: gets more and more expensive ...
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Anti Piketty Confusing Movement Along Demand Curve with Shift

In Anti-Piketty, the author's claim that the statement "If the supply of any good is insufficient and it's price is too high, then demand for that good should decrease which should lead to a decline ...
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What is a good way to generate realistic utility curves?

I am aiming to program a basic simulation of a simplified economy to look at the impact of various interventions. The economy will have N groups of homogeneous consumers and M producer / employer ...
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Why not say the buyer will *definitely* buy at price X?

In supply-and-demand curve, we draw curves of indifference. Say the demand goes through (1, \$1). Then Bob the Buyer is indifferent between spending \$1 for 1 apple or just keeping the \$1. If Sally ...
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Why is the equilibrium price not anything between \$0 and \$200?

Consider the second problem below from Varian’s Intermediate Microeconomics: Suppose that there were 25 people who had a reservation price of \$500, and the 26th person had a reservation price of \$...
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Commodity price and production data

I am doing some modeling and need some data. First I would like to get some data on commodity prices, ideally historical price data (but current quotes are fine). For example it would be nice to ...
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Demand Function

In cost and demand problems, why is the equation for price per unit named the demand function, as shown in the examples below? Also, why is it equal to a constant minus some multiple of the number of ...
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Will periodical increasing and decreasing cryptocurrency supply peg cryptocurrency to dollar effectivelly?

As far as I understand, in order to make cryptocurrency pegged to USD we need somebody to take the risks of exchange rates. So, if ratio CRYPTO to USD is at a given time 1CRYPTO:1,1 USD, then we ...
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Question on money supply related to new crypto project

Following questions are related to a crypto project I am working on and proper answers are of utmost importance to this concept's development. I unfortunately lack expert knowledge about money supply ...
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Understanding the law of supply

In high school, I've never really questioned the law of supply, taking it as a given. As I begin an introductory economics course in university, "relearning" the fundamentals of Economics, I realise ...
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Demand is a flow concept . What does this means? [duplicate]

Ok , so I know demand is always at a given price and at goliven time period . But what does this slabove statement actually means ?
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1answer
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Effect of money supply on price level

Consider a macroeconomy defined by following equations M = kPy + L(r) ; S(r) = I(r) ; y = m ; Where M is money supply, P is price level, y is output, r is interest rate, while k,m are constants. S(...
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Quantity supplied & demanded equation with tax

Here's the simple question I can't get my head around :( QD= 120-P QS= 2P-10 Tax= 25 euro per unit How much does the government receive?
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Deriving Single Good Demand Curve

came across a problem set that I had no clue how to tackle, but looks painfully simple. It's a market for electricity where households utility is represented by: U(E) = aE - 2mL2 (Household Utility) ...
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How does changing the Bank of England base rate work?

If we assume the demand for money (D above) is fixed in this position (for the purposes of this question), and supply (S) is fixed in this position, then how can the BoE change market interest rates (...
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Simultaneous Equation Models for Estimating Demand for a Good

Suppose in an economy there are $G$ available goods $X_1,...,X_G$. We can formulate a system of $3G+1$ equations as below: $$Q^d_g = A_{g1}+A_{g2}P_g+\mathbf{A}_g\mathbf{Z}^d_g+u_g\quad(g = 1,...,G)\...
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Must a market-based economy constantly expand?

I vaguely recall from my reading of Adam Smith’s “The Wealth of Nations”, during college, that he opined that a market-based economy must constantly expand. Is this recollection correct and, if so, ...
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Finding the demand function [closed]

Here is the problem: Suppose that an oligopolist charges a price of 500 and sells 200 units of output per day. If the oligopolist increases its price about 500, quantity demanded will decline by 4 ...
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How to work out Price with only the Derivative of Profit Function?

Best response functions are obtained by differentiating a profit function and solving for q. In equilibrium, the firms produce 30. But, there's no inverse demand function, so how would equilibrium ...
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Compute variables in perfect competition, in monopoly and duopoly

There are a given demand and MC value. How could I calculate quantity, price, and profit from these values in case of perfect competition, in monopoly and duopoly(...
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What are the (immediate) effects of changing a good's price on consumer and producer surplus?

Basically, I'm trying to understand why the total surplus is maximized at the equilibrium and what happens if the price isn't at the equilibrium. Say the price of a good is the equilibrium price. ...
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Recession and Net Export

When a country's economy is currently in recession (or has entered a recession), will the net export increase or decrease? What will happen to the major trade partner's net export (will it be the ...
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What is a suitable exponential to model a currency or cryptocurrency price increase?

I would like to model a supply and demand cryptocurrency market, not necessarily for Bitcoin, but for any coin. My difficulty is that I don't know what exponential factor might be realistic to do so. ...
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The supply and demand of Virtual Products

We know that the fundamental economic problem is scarce resources relative to unlimited wants. **Does this apply to apps and Ebooks?**They are essentially virtual products who have in theory have ...
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figure out the % increase in price given demand, supply and income elasticity [on hold]

Given that price elasticity of demand for a good is -1, price elasticity of supply is +1, income elasticity of demand is +2. Income increases 10%, it has been asked to find the percentage increase in ...
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What happens to equilibrium health stock if interest rate goes up for other capital goods?

The question above/title is one of the questions in our previous exam. Is the answer a movement along the MEI (Marginal Efficiency of Investment) curve since the cost of capital or opportunity cost of ...
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1answer
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Demand curve for items where consumers typically only buy a single product

This question began with rental housing (most people do not rent multiple apartments). The demand for apartment units in any given period is limited to the number of people searching for units (not ...
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Optimization of supply between multiple distinct demand 'markets'

I am attempting to solve the following optimization problem, and am curious if it is doable without an iterative process. Consider the following: 1) Two distinct markets (Market X and Market Y) with ...
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2answers
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In Supply and Demand is Quantity the Amount of Inventory of the Amount of Units Sold?

I am new to economics in school and we are going over supply and demand. This may sound like a very simple question, but I just need one thing clarified. When quantity is mentioned in the graphs is ...
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How can you show crowding out doesn't occur in a liquidity trap on a graph?

'In a liquidity trap, the excess rise in savings means that government borrowing won’t crowd out the private sector because the private sector resources are not being invested, but just saved. ...
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237 views

How does price-elasticity of supply affect the incidence of tax on consumer and producer

From what I've read only price-elasticity of demand (PED) (not price-elasticity of supply (PES)) affects the burden of tax on the consumer/producer. However, my graphs suggest PES does affect it. Why ...
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Price Elasticity and Total revenue

So my question is, they say when the demand is inelastic and we raise the price the total revenue goes up, now suppose a 25% rise in price results in a 24% fall in demand, and I know it is very close ...
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What happens if an expensive thing goes into high supply for a limited time?

Let's say we have this Product A and it costs $1000, it's incredibly useful so it's in high demand, and we got it from a very-short limited-time "event" But then it goes available again in high ...
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How to find equilibrium after the demand and supply shifts? [closed]

I've started to learn microeconomics recently and I'm struggling to understand the supply and demand. Everything seems easy when Khan explains it but I can't solve the problem apparently. I took it ...
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JK Galbraith Quote: How to interpret?

I came across a very thought-provoking quote by JK Galbraith concerning supply-side economics. The quote is as follows: The poor don't work because they have too much money. The rich don't work ...