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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Supply and Demand [closed]

• The construction industry booms • The cost of steel, an input in the production of nails, increases 25 percent what is the combined effect of these two events on the price of nails? On the quantity ...
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Deadweight Loss and Excise Taxes

I am currently reading through the 5th Edition of Economics, by Paul Krugman and Robin Wells. Right now I am learning about excise taxes and how their different aspects (government revenue, deadweight ...
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Would Pilots and Air travel be considered complementary?

Now, my economics teacher and I have a disagreement. According to theory, as the price of air travel (airline tickets) increases, the demand for pilots will decrease as well because fewer people will ...
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Analytical approach to estimate equilibrium price for Real Estate Property

I am looking to calculate the equilibrium price, i.e an optimal price that I can set without affecting demand and maximize revenue. I've gathered historical data: occupancy rates, asking rents for ...
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What is supply-side of economics?

I've got a question for economics that I need help with, here is the question: "What is meant by the supply side of economics? Define the term ‘supply’ in the context of economics and explain the ...
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Interest rate determination in the real world

I have just learnt about the demand and supply framework for money and how the equilibrium interest rate in an economy can be determined. In theory, based on that framework, an increase in nominal ...
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simple aggregate demand GDP question

Explain whether aggregate demand responds more, less, or in the same way to changes in autonomous consumption when taxes depend or do not depend on GDP. I think the answer is more. As in my ...
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Using ML to estimate demand function

Say, I am looking to estimate the demand curve for rental of a real estate property. The demand varies depending on time of the year, location, economic and demographic variables. I'd like to ...
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Can a rescue package be considered as a subsidy to the industry?

In the BBC article, France announces €8bn rescue plan for car industry, it is mentioned that the car industry will be given a rescue package to avoid unemployment. Would this be considered as a ...
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What is the difference between the demand schedule and the demand curve?

What is the difference between the demand schedule and the demand curve that a monopolist or monopsonist has? Could someone provide details for both cases or even some paradigm or a graph. I can not ...
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Price Changes in Factor and Product Markets

I think something is wrong in my reasoning, and I can't really find out what it is Lets say the supply of labor decreases in a market. That would mean that the wage rate would increase in that market....
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Why did coronavirus cause a food shortage?

The argument I have seen is that since restaurants closed, demand for food is down. I understand how demand being suddenly lower could disrupt supply. What I don't understand is why demand is down. ...
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Demand-side effects meaning

I found the term of demand-side effects in the abstract of the following paper: journals-sagepub-com/ DOI/abs/10.1177/0974930619872083 . What does that mean? Can you explain it to me please? I need ...
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Is this a violation of the law of demand? [closed]

Beach resorts typically raise their prices during the summer months and yet more people book rooms at those times. Is this a violation of the law of demand? If so, why? If not, how would you be able ...
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How do you calculate the price of a good or service adjusted for scarcity?

For example, Widget A is worth \$100 when there are 50 of them available in the market, but the price goes up to $110 when there are only 40 of them left. Widget B is worth \$100 when there are 50 ...
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Why is there a demand for stocks? [duplicate]

The obvious answer is of course that people want to make a profit via either capital gains or dividends. Dividend stocks are easy to wrap my head around. As part owner of a company, an investor would ...
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Can the demand curve be a rectangular hyperbola, but $E_D \neq 1$? [closed]

So, I am given the next table: I am asked to find $Q_D$. So the prerequisites to find $Q_D$ is that the price must change, and all other factors of demand must be steady. So, I can find the $Q_D$ ...
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Profit maximization, when $MC = P$, in a simple supply table and curve

Our economics school book states that the profits of a company are maximized when MC = P. However, I am having some trouble wrapping my head around that. For example, I have the following exercise: ...
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Why would oil suppliers choose a lower priced contract?

The West Texas Intermediate (WTI) futures contract has ranged from \$6 to \$20 in the last 48 hours. The May Shanghai International futures contract is 205 Yuan (CNY). At 7 CNY per USD, that comes ...
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Industries that thrive in crisis like COVID 19

I am aware that some industries thrive during crisis times like COVID 19...Food supplies, medical, counselling, funeral services, liquor etc. Are there any other industries that may do well during ...
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Does elasticity vary along the Demand/Supply curve or is it a summary statistic of a curve?

I know that the Demand curve has elastic and inelastic regions but when we say horizontal demand/supply curves are elastic or vertical curves are inelastic, in that case, does the elasticity still ...
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“Consumption lowers investment” mankiw explanation

I am teaching myself macroeconomics and I am stuck on this reading Mankiw: Because the economy’s output is fixed by the factors of production and the level of government purchases is fixed by the ...
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$a\geq 0$, $x\succsim y$ implies $x+a\succsim y+a$ so the preference is linear?

$\succsim$ is a continuous and local non-satiate weak order. $x,y,a$ are vectors in $\mathbb R^n$ We say $a\geq0$ if all directions of the vector $a$ is greater or equal to zero. We want to prove (...
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Won’t paying wages to temporarily unemployed due to Coronavirus result in inflation?

UK government promises to pay 80% of wages for people unemployed due to coronavirus. I am not economist, so I am probably missing something, but shouldn’t paying wages to unemployed due to coronavirus ...
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What are the consequences of price-capping non-perishables undergoing temporary demand-spikes?

Due to the recent coronavirus outbreak (2020 for future readers), many consumers worldwide are overstocking on non-perishable products like toilet papers and hand sanitizers, in order to avoid ...
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Why would the price of goods rise up after increased consumption due to the outbreak?

On the wake of the COVID-19 outbreak, consumption of some goods will increase. But, my question is why so? My understanding is that, since aggregate demand for these goods has increased, supply can'...
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Few questions regarding treasury bills

I have a few questions regarding repurchase markets. My professor told our class today that Repo (Repurchase) Markets are essentally markets where the government lends corporates a very cheap rate of ...
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What if the government impose both price control and supply restriction on the market?

Due to the virus outbreak, there is a surge in demand for mask and hand sanitizes. To prevent price hiking government impose a price ceiling on the products, however consumers are behaving irrational (...
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(AD-AS model) How is it possible for firms to spend less, but supply more at higher price level, assuming no increase of the SRAS?

According to the interest rate effect theory higher prices will lead to lower GDP demanded because firms will spend less due to loans being more expensive. It seems at odds with what the SRAS curve ...
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Does fiscal policy always shift the AD more than the SRAS?

I noticed that when I read about fiscal policy and the AD-AS model, it looks implicitly assumed that when we use fiscal policy we intend to shift the AD, even when the economy experienced a negative ...
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Considering existence of firms with sticky prices of goods, why are we sure that SRAS will be upward slopping?

One of theories that explains why the SRAS is upward slopping is the theory of sticky prices. For an example, suppose there is inflation. In the short run it will take different time for firms to ...
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How will economy find long-term equilibrium in AD-AS model in case of a negative supply shock?

Let's suppose that negative supply shock happened that affected SRAS, but not LRAS. Let's also assume that previously there was long-run equilibrium at point $A$. Due to negative supply shock SRAS ...
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Why can't I find masks for the corona virus?

Not an economist by far, just a layman, and that's a layman question. How is this possible that it's difficult to find mask for the Corona Virus? I have been several times to 7/11, boots, Watson, and ...
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Why are break-even and shut down points based on average cost?

I understand the basic idea of break-even and shut-down points, where break-even is the price at which revenue covers all economic costs, and is located where the marginal cost equals to average cost. ...
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Why does supply (and demand) shift left and right as opposed to up and down?

I've wondered about this for a long time. In the past I rationalized it by saying that up and left were the same (or at least have the same overall effect), and that thinking in terms of left and ...
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Could a global supply decline lead to higher profits?

Imagine the following scenario: There is a market with some good. The demand curve stays the same over the whole scenario. Due to an unfortunate event (e.g., bad weather), the production lowers. All ...
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Calculate profit when trading between more than two goods

When trading two goods (or currencies) it is relatively easy to say if you are making profit when you know the exchange rates. For example Person A trades Bananas for Person B's Apples. Person A gives ...
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Market impact function

I have the following Dynamical system for market impact function $$p_{t+1}-p_t=a(d_t-s_t)$$ $$s_{t+1}-s_t=bp_ts_t-cs_t$$ $$d_t=y-rp_t$$ where $s_t$ is quantity supplied, $d_t$ is quantity demanded, ...
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Why are demand and supply curves shown as concave up?

Why is it that demand and supply curves are typically shown in graphs, including in Econ 101, as concave up (i.e., convex)? I know what it entails mathematically—that if $p(q_d)$ is a demand curve, $...
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Supply elasticity of finite (non-renewable) resources

What is the elasticity of supply of a finite (non-renewable) resource that cannot be replaced (i.e. fixed stock)? Intuitively it seems like it should be inelastic, yet I can also reason elastic.
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When does the law of diminishing returns apply?

Law of diminishing returns does not always apply: The law of diminishing returns states that in all productive processes, adding more of one factor of production, while holding all others constant, ...
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Interpretation of $\frac{\partial }{\partial p_1}Q_1(p_1, p_2)/\frac{\partial}{\partial p_2} Q_1(p_1, p_2)$

I am interested in an economic interpretation for the ratio of partial derivatives of a demand function $Q_1(p_1, p_2)$, which is \begin{equation} t=\frac{\frac{\partial}{\partial p_1}Q_1(p_1, p_2)}{\...
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Are businesses and individuals buying clean / green / renewable energy contribute to slowing down the climate change?

I'm not sure if an individual choosing a "green energy supplier" is making any difference. My (potentially naive, uneducated) logic is as follows: ...
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Uniform price vs discriminatory price double auction

Uniform price and discriminatory price double auctions are the most commonly used auction mechanisms in the trading markets especially in peer to peer energy trading markets. However, I could find ...
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How to calculate clearing when supply demand curve do not intersect

I am working on a P2P energy trading project and want to implement a uniform price double auction. I have confusion about how the clearing price will be determined if the supply-demand curves do not ...
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Is the supply of a price-taking firm increasing in price?

Is the supply of a price-taking firm increasing in price? When the price goes up, this means that firms can make more profit. Therefore, they would want to increase their supply. Is there a way to ...
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Examples of textbook definitions of transaction costs, for a non-econ student

I'm not an econ major, neither am I taking it as a minor, however seemingly out of nowhere economics has jumped into my CS class when talking about the role of IT in reducing transaction costs of ...
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Cobb-Douglas demand yields a zero marginal revenue, monopolies don't exist?

From here and a pile of maths that I've done myself, $x_1 = \frac{a}{a+b}\frac{m}{p_1} \\ x_2= \frac{b}{a+b}\frac{m}{p_2}$ This yields inverse demand equations, when you have numbers stand in for $...
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When everyone sells at an event of a recession, who buys?

I'm trying to walk through and understand the basic events of the great depression. I understand that at one point (Black Thursday) the news of a downfall of stock prices hit investors, so they ...
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Question Regarding Equilibrium Price & Surplus

So here's an example of a standard Supply & Demand Relationship for an Individual Supplier: As a supplier, for 1 dollar, I'll produce 1 unit of something. For 2 dollars, I'll produce 2 units, for ...

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