# 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.

266 questions
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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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### 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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### 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 ...