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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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Determine changes in demand and supply consistent with the price behaviour

I am sorry but I have to add an image link to the question since it comprises of a diagram. ANS: B, but I'm still trying to figure out why.
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If price increases and quantity remains the same can we infer that demand is perfectly inelastic?

My college tutor told me that demand for college admission at our institute is price inelastic. She says so, because, in the past 20 years, price of college education at our institute has increased, ...
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Is it right to derive social marginal benefit by adding individual prices instead of quantities?

I come across a lecture material on market functions and externalities that makes me quite confused. Here's the setup: Two stores are located next to each other. If one installs a camera system in ...
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What is USD THO imports?

I'm looking for data on Chinese copper imports and production. This graph shows units in USD THO over the years but I have no clue what the heck THO is. https://tradingeconomics.com/china/imports-of-...
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Difference between Giffen and inferior goods. Why aren't all inferior goods Giffen goods?

What is the difference between an inferior good and a Giffen good? Are the two following definitions for an inferior good equivalent? Def 1: An inferior good is a good for which the demand decreases ...
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Utility Function - Calculating consumer surplus [on hold]

Consider the utility function $U(X_1, X_2) = X_1X_2$. Assume that the consumer has budget $M=18$, that the prices are $p1 = p2 = 1$ to start, and that the price of good $1$ rises to $p1 = 2.25$. Find ...
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Flooding the real estate market with luxury homes: will average prices rise or fall?

If every middle class single-family detached home in a sprawling metropolitan area like Los Angeles were each replaced with two luxury condos over a short period, would average real estate prices rise ...
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What are “the fundamental categories of economics”?

I had an introductory class in marketing last week, and the professor wanted to test our previous knowledge of economics (we are juniors). He asked us this simple question: "What are the fundamental/...
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Supply curve and Market Equilibrium of a Giffen Good

A Giffen good is an inferior good with upward sloping demand curve. This definition only considers the demand side, but what a supply cure of a giffen good look like? Is a giffen good normal on the ...
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62 views

Market demand independent of distribution of income

If preferences are identical and homogeneous, then show that market demand for any good must be independent of the distribution of income. My workings are as follows: $$q^{d}(p)=\sum_{i=1}^{n}f(p_x,...
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Is there any formal definition of a relationship between resource availability and demand?

I do not have any background on economics. So my question might sound too simple and I hope it to be clear enough. I am curious about the following: Is there any formal definition of a relationship ...
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Supply curve when the marginal cost is zero

The supply curve is built as the average marginal cost (MC), when the MC is equal or higher than the average cost (AC) The marginal cost increases, as a result of the opposite effect of marginal ...
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Find optimal price from demand function?

I've been struggling with this for hours, trying to figure out how to solve this. "A perfectly competitive market has the marginal cost function, c (cost is C(y)=cy) and is facing the demand function:...
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Cross price elasticity of demand vs Price elasticity of demand

Is the cross price elasticity of demand between two goods always lower in magnitude than the price elasticities of demand of each good?
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Question about Supply and Demand of health supplements, equilibrium price and quantity

Nowadays, It is observed that people are more health conscious taking more regular health supplements. Moreover, more drug companies are involving in the production of health supplements. a) How ...
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61 views

Can marginal revenue be increasing?

As per my calculations, the derivative of the MR curve is given by: MR'(q)=2p'(q)+qp''(q), where p(q) is the inverse demand curve. Therefore,for a downward sloping demand curve, if the second ...
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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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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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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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1answer
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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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1answer
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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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2answers
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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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66 views

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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1answer
51 views

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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1answer
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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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32 views

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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409 views

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. ...