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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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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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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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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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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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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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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 ...
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How to determine which triangle is DWL?

On a graph where there is a shift in either the demand or supply curve, there is often a deadweight loss, but which triangle is correct? For instance in this image the DWL is the green triangle, but ...
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Are there any instances where short run demand/supply is more elastic than long run cases?

Conventionally both demand and supply for goods and services are both more elastic in the long run than in the short run. My Question Is there ever an instance where demand and/or supply for a ...
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How does stamp duty tax in Australia affect demand and supply of housing?

How would introduction of a stamp duty tax in Australia affect the demand and supply of housing? Would it shift the supply OR demand curve (and in which direction)? How would the market price change (...
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How to proceed with safety stock calculation when demand is constantly fluctuating?

I'm trying to start and switch off our inventory management into a safety stock system to avoid stock outs and lessen inventory costs. Our current system is made-to-order, such that when we receive ...
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How do I determine the demand curve of a product through a survey?

I'm a student and I want to determine the demand for a product (and consequently determine what will happen if the price of the product increases). I don't have access to any businesses that can ...
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What does a “sell-off” mean if every stock transaction is balanced?

If every stock transaction is "balanced" (1 sell = 1 buy), then what does a "sell-off" actually mean and how does it move the price of a stock? Ex. If millions of people sell a stock, there's ...
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Determining the elasticity of Hicksian Demands

If we have Hicksian (compensated) demand functions, how can we determine the income elasticity and own price elasticity? Is the procedure the same as for Marshallian (uncompensated) demands?
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Simple Determinant of Supply Question

Let's say we have ethanol and chips, both of which are made off of corn. If the production of ethanol is subsidized by the government, what happens to the supply of chips? The way I see this, more ...
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How change in technology affects the price of labour and capital?

If the technology improves how does the price of labour and capital change. We take the neo-classical assumption that demand for each factor depends on it's marginal productivity, and demand and ...
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How price and quantity of ice cream sold changes when the price of yogurt reduces?

I am a newbie at economics and would appreciate help from the community. Question Use the model of supply and demand to explain how a fall in the price of frozen yogurt would affect the price of ...
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How much of an assets price change is due to speculators and functional buys/sellers

If (for example) a heavily traded asset like crude oil has a price move of x, how much of that is influenced by functional buyers/sellers and how much by speculators? Let's say x is +100, there are 8 ...
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Can someone explain me the relation between effective demand in terms of wage-units and output elasticity?

I have been stuck in the next text. Can someone explain it to me? Thank you. It is possible for effective demand in terms of wage-units to increase when the output of an individual industry is ...
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What would happen if there was a one-time redistribution of wealth from the wealthiest 1% to the other 99% of people in the US? [closed]

If you think this is going to lead to answers which are too speculative, let me know, but I think it should be possible to at least make some strong educated guesses... What would happen if there was ...
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Why or when does the area under the demand curve equals the total utility for consumers (perfect competition)?

Why or when does the area under the demand curve equals the total utility for consumers (perfect competition)? From the demand side, one knows that when combining the utility function and the budget ...
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relation between the demand function and the marginal utility function

Can one say that the demand curve equals the marginal utility function? I have one course where this is stated. However, the demand curve dan be derived from combining the utility function with the ...
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Does this explanation pertaining to the Supply Curve and Law of Supply make sense?

I was having some trouble understanding the Law of Supply, and I now understand that I was looking at it from the wrong perspective. Now, I'm confused with shifts in the Supply Curve. After reading ...
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Supply and Demand: Why should lower costs lead to a rise in supply?

I know that the conventional explanation linking fall in cost of production and rise in supply is that a fall in cost of production of A means that it is more profitable to produce A. Thus, suppliers ...
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What lies behind supply and demand model?

This is a very basic question. I can understand that price of goods and stocks change follows the supply and demand law. On the other hand, I find it difficult to understand what happens in the real ...
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A question of deriving an industry supply curve from cobb-douglass production function

I have a question about a proper derivation of industry supply curve from cobb-Douglas. The production function is given as: \begin{equation} q_i = 2x_1^{1/2}x_2^{1/2} \end{equation} the price of $...
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Trying to show result of prisoners dilemma simulation through supply/demand graph

I made up this situation where candidate $A$ and $B$ are vying for a job. They can accept wage $x$ or undercut this to agree to work for $x-k$ where $0<k<x$. My point was that eventually they ...
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If porn is free on the Internet, then how do porn stars actually make money?

On the Skeptics Stack Exchange, porn is estimated to generate 57 billion dollars a year in America. However, I've never once paid for porn, and I don't know of any other friends, classmates, students ...
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How can the bond market be overvalued when the value of a bond is a function of interest rates?

I seem to have a major misconception in my understanding of the bond market and how interest rates and demand and supply influence valuation levels. I hope someone will be able to clarify. My ...
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What Creates the Price in the First Place

I just wanted to know if price changes how much quantity is supplied or demanded then what creates the price in the first place? If you say that price affects supply and demand and supply and demand ...
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Why is there negative sign for income effect in slutsky equation? [closed]

Slutsky identity is given by: ∆x/∆p = (∆x/∆p)|substitution effect + (∆x/∆p)|income effect Now we know ∆m= x*∆p => ∆p=∆m/x Therefore, ∆x/∆p = (∆x/∆p)|substitution effect + (x*(∆x/∆m))|income effect But ...
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Is the law of demand violated in the case of perfectly elastic demand?

In the case of a perfectly elastic demand curve, when price rises the consumer is said to demand 0 units of the said commodity. However, graphically, even when price falls demand falls to 0. This ...
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National Capital Outflow Question

I have the following example for an imposed quota on the importing of Japanese cars to Europe and it's relative effects: I am told that $NX=NCO$ (Net exports are equal to National Capital Outflow). I ...
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How can power/electricity prices be negative?

Bloomberg shows this chart: I understand the above chart to mean that consumers were actually paid to use electricity. (Please correct me if I'm mistaken.) I was wondering how this is possible? How ...
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Could someone please explain the proof of Hotelling's lemma?

According to https://en.wikipedia.org/wiki/Hotelling%27s_lemma, the maximum of the firm's profit at some output is given by the minimum of the difference between the profit and the revenue. However,...
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In microeconomics : is this the contradiction in the atomicity of firms ?

Let $p$ be the market demand. It is a function of the market production $Q$. Let $q_i$ be the production of firm $i$. Reading Steve Keen (in Debunking Economics, chapter II) quoting George Stigler, I ...
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Why is the Marginal Social Cost supply curve more efficient than the Marginal Private Cost supply curve?

In my microeconomics class, we are currently learning about externalities. Below I have a picture from my TA's lecture. The idea is that the point where the demand line intersects the Marginal Social ...
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Explaining why Hicksian demand is more inelastic to intermediate micro student

How would you best explain to a student in intermediate micro class that the Hicksian demand for a normal good is more inelastic than the Walrasian demand without heavy differential calculus? When I ...
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659 views

Does a price on the demand curve represent the highest or lowest price the consumer is willing to pay?

My question comes out of the context of the explanation for quotas in the textbook Macroeconomics, 4th edition by Paul Krugman. The explanation is for what could've happened had a quota on cab rides ...
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Why are the formulas for price elasticity of supply and demand the same in intro microeconomics?

I get that they are both gauging responsiveness, but I don't particularly understand why they are the same formula.
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Is there an economically sound way to decide between buying media or a streaming subscription?

How can a consumer (like myself) decide on whether they should pay for a music streaming service based on economic reasoning? Assumptions: The budget allows paying for a € 10/Month music ...
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In which situation does the demand and supply curve both shift?

In which situation does the demand and supply curve both shift? My professor told me for the demand curve, the income of the consumers changes etc. will shifted the demand curve; For the supply curve,...
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What's the term for elastic pricing?

What I've called "elastic pricing", has a true economics name that I believe I once heard. Here's the notion: I walked into a gas station to buy a fountain drink. I only brought a dollar with me, but ...
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Teaching changes in “demand” v. “quantity demanded”

I am always struggling with teaching this one. The terminology of standard intro textbooks is unfortunate, although it's so pervasive that we probably have to live with it. By a "Demand", intro ...
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A working model of Supply and Demand

I've just started to read an excellent textbook "Macroeconomics" by Gregory Mankiw. In the beginning he explains how economists think: Young children learn much about the world around them by ...