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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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Are supply and demand always (with arbitrary dimensions but still) linear?

I have economics knowledge of high school level (and basic economics from my engineering degree), and I always noticed that supply and demand functions are linear (in 4+ dimensions). It is -in ...
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Is this Economic Engine Cold Start theory valid? (ie: could it work?)

First, I am not an economist so forgive me if the wording is not correct for the discipline. Second, I suspect this may end up being a "discussion" before it becomes an "answerable" question in which ...
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How does supply and demand determine price for the following scenario?

Two individuals are stranded on an island. Bob and Jill. By themselves they can produce: Bob: 5 fish & 5 coconuts Jill: 5 fish & 5 coconuts If they specialize and trade, they can produce: ...
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Do the partial derivatives of the compensated demand have an interpretation?

When obtaining the Marshallian demand from a utility maximization problem we have a classification of normal goods, inferior goods, Giffen-goods, etc.. These are related to the first derivative of the ...
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Adam Smith: If humans are self-interested individuals, why should we reinvest our wealth?

According to Adam Smith, humans are self-interested individuals. If this is true, why does he argue that people should reinvest their wealth? How does this benefit a self-interested individual? Does ...
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Deriving the supply curve

In deriving the supply curve how does one create the supply curve like the one we see in textbooks (upward sloping, possible curve), if we are only given a single quantity and price at a moment in ...
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Does the law of supply reject rise in total revenue for goods with elastic demand?

If demand for a product is elastic( consider the case when the price is low ), lowering the price further increases total revenue. However, as per the law of supply, low prices cause suppliers to ...
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Why is the Supply of Labour More Elastic in a Single Province/State then it is in the Country as a Whole?

Apparently, the federal government has a greater ability than provincial government to increase tax revenues by raising tax rates because the supply of labour is more elastic in a single province than ...
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When a demand function is split, how do we algebraically change function

For example, in tacit collusion for a Bertrand situation, demand would be split between the two colluding firms. How would the reflect upon the demand function? For example D = 100 - 2Q, and for ...
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Subsidies Incidence on Producers and Consumers

When calculating the incidence on producers and consumers using a demand and supply curve is dead weight loss a part of the incidence? I know that for example the producer's incidence is a rectangle ...
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Why does having a single market price maximize quantity traded?

From what I have heard, the exchange of goods defined by the intersection of supply and demand generally maximize quantity traded, although this doesn't apply in cases of monopolies, imperfect ...
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Cost function and short run supply

Suppose there is a number of identical firms producing diamonds. Let the total cost function for each firm be given by $C(q, w)$, where q is the firm’s output level and w is the wage rate of diamond ...
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Price and quantity in equilibrium [closed]

I have a market with 1000 suppliers. The total demand can be described by $$ Q=-300000 P + 6000000 $$ while the total supply can be described by $$ Q=200000 \sum(MC^2)-200000 $$ What is the price ...
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Music Streaming Impact on Producers

I am currently writing a news commentary on music streaming services. My commentary is focused on demand and supply, consumer and producer surplus, externalities, and public goods. And there are a few ...
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Price Producers Receive as a Result of Indirect Taxes

In my economics class, we were introduced to the idea that if the government imposes an indirect tax on a good, the price consumers have to pay increases, but along with this increase in price for ...
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How Do I Calculate the After-Tax Equilibrium Quantity of a Supply and Demand Graph? [closed]

Suppose the supply of a good is given by the equation $Q_S = 360*P_S - 720$. And the demand for a good is given by $Q_D = 960 - 120*P_D$. The government decides to levy a tax of \$2 per unit on the ...
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Question About Basic Supply/Demand Concepts

I am learning the basics of Supply/Demand, and I came across this question (it's not a part of my homework; I just want to know the answer/explanation because I'm doing some extra practice problems ...
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Did I do something wrong in calculating the market equilibrium?

Sorry for asking such a silly question, but something seems odd about my answer to this question: Suppose that two consumers, Jeff and Walt, are the only consumers in the market for carrots. Jeff’...
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Concept of absolute advantage

Can someone please explain the concept of absolute advantage with an example? I know it has to do with the fact that a nation should produce a commodity that is cheap relative to other commodities but ...
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how can devaluation of a nation's currency lead to increase in government expenditure, hence facilitating economic growth

how can devaluation of a nation's currency lead to increase in government expenditure, hence facilitating economic growth. I was reading through a textbook and saw that the devaluation of a nation's ...
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Effect of a good's inputs on elasticity of supply

I am trying the answer the question: If a good is produced using inputs for which there are no substitutes, the good's A. Elasticity of supply is likely to be small B. Elasticity of ...
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How does the Uber's pricing model work?

I'm working on a paper on the sharing economy, and in particular on its economic implications. I am aware of the surge pricing model that Uber adopts, and of how it works. But I'm wondering on what ...
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When Does a Shift to the Right Happen in the Demand and Supply Curves Simultaneously?

If, for example, Health Canada issues a public statement that states eating pizza is good for your overall physical health, would this result in both a shift in the demand curve for pizza to the right,...
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Which utility function yields a constant price elasticity of demand function?

How do I know which utility function I can use to find an isoelastic demand function, e.g., $x(p)=Ap^a$? And similarly, which cost function can I use to find an isoelastic supply function? Does it ...
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What will happen to property prices if local currency weakens against USD?

Say that the conversion rate of a local currency changes so that the currency is now relatively weaker against foreign currencies and as a result the inflation rate increases and as a result of that ...
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Why is perfect price inelasticity of demand not considered an exception to the law of demand?

Assume a case of perfect price inelasticity of demand. In such a case, PED = 0 The quantity demanded does not respond to changes in price, i.e. it remains constant, even when price increases ...
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Establish demand curve with infrequent sales

I sell variations of an item on eBay. It is an unusual commodity which I purchase in bulk lengths and then cut to various sizes. They come in about 20 types, which I then sell as 10 different lengths, ...
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Demand curve from logit model

Is it possible to derive a demand curve from a discrete choice multinomial model. For instance, a logit model would give the probability of purchasing each good. But can I translate that into a demand ...
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Marginal Utility with Supply and Demand Curves

Can someone explain how the equilibrium points in the image below (source: The Foundations of Econometric Analysis) represent marginal utilities. I have read about the relationship between the ...
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Why is AC = MC in the monopoly?

Using the Microeconomic Theory Basic Principles and Extensions, Nicholson, W. and Snyder, C., I've reached to the point where Monopoly and Imperfect Competition is discussed (Chapter 14 and 15 to be ...
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Demand for utility function given prices and budget

I have to find the consumer's demand at prices $\textbf{p} = (1,1,1)$ and budget $m=4$ when the utility function is given by $$u(x_1,x_2,x_3) = 3 \sqrt{x_1+x_2+2x_3}$$ or when transformed $$\hat{u}(...
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I need something like “how to calculate equilibrium price for complete idiots”

My grandfather raises, sells and resells livestock and I want to help him by calculating when and for what price to (re)sell or buy livestock. As far as I understand(although I have a hunch that I ...
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What is the relationship between the demand for loanable funds and investment?

If the demand for loanable funds decreases, investment increases because the real interest rate decreases. Isn't that a contradiction, because loanable funds are used for investment, and a decrease in ...
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Applying Economic Principles to Other Studies

I was recently reading this article about some research that was done concerning the illegal killing of elephants. There were two quotes that caught my attention: ...illegal killing [of the ...
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Demand estimation with a lagged dependent variable

Suppose I have the following structural equation for demand estimation in time-series: $$q_t=\beta_0+\beta_1\hat{p_t}+\beta_2incom_t+\beta_3q_{t-1}+\epsilon_t$$ Where $q_t$ stands for the quantity ...
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Price elasticity of demand in the point of economic equilibrium

The function of demand is:\begin{align*} D(p) = 66-3p-p^2 \\\end{align*} The function of supply is: \begin{align*}S(p) = 4p^2+8p-114\\ \end{align*} The task is to find price elasticity of demand in ...
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Does the demand for bad quality products increase when there is information asymmetry?

Situation 1 In a situation where we have two markets one with good quality products and the other with bad quality products, if we are in a situation where the buyer knows which is the good product ...
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eBay economics - total revenue impact from expanding ecosystem by 1 seller

While I think my question is straight forward, I'm guessing the answer to it is anything but. Thanks in advance for any insight you may be able to offer, even if it's just a directional assist. Here'...
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Does aggregate demand increase investments?

I just read that increase in aggregate demand increases investment for a given interest rate. How is it possible because when aggregate demand increases, this shifts the demand for money to the right ...
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demand impact on shares price

Knowing that share prices are determined by the forces of supply and demand, other factors can also play a role in this but lets consider the fact that prices are only based on supply and demand.In ...
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What do supply-demand curves really look like?

In my basic high school economics course, we've always used supply-demand curves that are lines to simplify calculations. In real markets for real goods, what do the supply and demand curves look like?...
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Horizontal demand curve

If it is assumed that every consumer within a particular region has the same 'valuation' for a certain product, and consumers will purchase no more than one unit of the product, is the market demand ...
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Effect of Strengthening US Dollar on Commodities

Many commodities are prices in US dollars. If the Dollar strengthens, then commodities (in non-US countries) will become more expensive. From the consumers' (suppliers') point of view, this should be ...
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471 views

Shifts in demand curves

When plotting a demand curve for a good, lets say carrots with price on the y-axis and quantity demanded on the x-axis. A shift any determinant of demand other than price of carrots results in a shift ...
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Modelling Pay what you want

I have been trying to model a Pay What you Want scheme. Now, for a monopoly it is clear that monopoly will have more profit by setting monopoly pricing assuming all players are selfish. But consider a ...
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What does a supply+demand curve look like for fare evasion?

Consider the demand curve for fare evasion on a train. The price (I suppose) would be the average amount of money paid per ride in fines, and the quantity would be the average number of fare evaders ...
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Why is food less expensive in India than the United States?

India has 4x the population, less land, and far worse technology and infrastructure than the United States. Shouldn't food cost in the US be less expensive? I've never been to India, but it seems like ...
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Is there an economic term for decreased demand due to expected decrease in price due to a product's value lasting for a finite amount of time

So, at work we are doing a charity bake sale. Lunch hour is long gone. An email was sent out offering everything at half price. I imagine decreased demand as everyone knows they have to get rid of ...
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Supply-side economics: reduction in tax

In a nutshell Supply-side economists support reductions in tax, because government revenue can increase (according to the Laffer curve) and businesses and consumers will be incentivised to invest (...
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What would be the results of improved goods manufacturing efficiency?

Improved manufacturing efficiency could cause price reduction of goods, increase manufacturer's profit (still asks for the same price, but has less expenses), and what else? Is it possible to predict ...