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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70 views

What is one dimensional, ordered type?

I am reading papers about moral hazard. What is one dimensional, ordered type $\theta\in\Theta$? What is one dimensional, not ordered type $\theta\in\Theta$? Could you please give an example? ...
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Simple model to predict oil prices

Back when Hugo Chavez was still alive (former leader of Venezuela), he said they made "simulations" to predict how much oil prices will increase if they retire the supply of oil they were giving to ...
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Elasticity, link between demand and supply

I have a exercise with the corresponding answer, but i don't get it: Suppose there's a better wheather this year and the size of the harvest of soy increased a 60%. The demand curve for soy did not ...
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51 views

Has anyone ever done an analysis of the flexibility of the demand curve for summer camps?

I'm trying to support an argument being made with respect to camp fee changes, and I would need to know if anyone has ever come up with a "rule of thumb" for demand drop due to price increases for a ...
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62 views

Why the prices for very popular items do not increase?

I am always surprised why there are certain services or items which are on high demand, and do not have their prices increased to generate more profit. As an example, tickets to the very popular EDM ...
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2k views

Why is ATC tangent to Demand in a Monopolistic or Mopolistically Competitive Firm Making Zero Profit?

I understand that the Average Total Cost is equivalent to demand in a zero profiting monopoly or monopolistically competitive firm in order for there to be zero profits (when ATC = P at a given ...
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Why is the Market-Clearing Price also an Equilibrium Price?

When the price is such that supply equals demand for e.g. bicycles, everybody who wants to buy a bike at that price gets one, and every bike gets sold. Everybody goes home happy and the marketplace ...
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142 views

Yellowstone National park is now charging higher entrance fees than before.This should result in: [closed]

a. a movement up along the downward sloping demand curve for park visits b. a decrease in the demand for park visits c. a movement down along the upward sloping supply curve for park visits d. ...
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Why does marginal private cost increase with quantity?

There are often two ways of interpreting the demand and supply curves. The market The demand curve consists of all buyers -- some who value the good more than the market price, and some who value ...
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increased demand but no increase in price?

I am teaching myself basic economics and I'm trying to understand supply and demand. Recently, in my country, there was news of a strike by the petroleum suppliers. Expectations of an impending fuel ...
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787 views

What's the effect of the used car market on car price?

While justifying his decision to sell a one-use textbook to his students, a BYU econ professor states: A word about the Kearl text. I do not receive any royalties and have no economic interest in ...
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Explanation of differential equation for Price Elasticity of Demand

I understand that Price Elasticity of Demand (PED) measures the percentage change in quantity demanded of a good with respect to a percentage change in its price. However, I don't quite understand ...
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Pros and Cons of Elasticity of Demand Represented as an Absolute Value

I've been reading quite a bit about elasticity of demand. There seems to be an argument among texts as to whether elasticity of demand should be represented as negative or as an absolute value. The ...
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How can I model immigration and xenophobia economically using these equations?

I'm trying to put together a toy model for immigration ($I$), labor prices ($w$), and a measure of xenophobic/nationalistic sentiment ($A$). What I've come up with so far is the following: $$\frac{dI}...
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What is the effect on society of me choosing to make my own shoes, food, or clothing?

This question comes from someone who suggested brushing my teeth benefits the economy because it reduces demand for dentists, lowering the price. However, when I think more generally of making my own ...
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supply demand question beginner

I am learning about shifts in supply and demand. Things that shift supply include things like improvement in production technologies. But why would a firm want to increase their supply if they are ...
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734 views

Is there an intuitive explanation for the tax incidence formula from elasticity?

You're probably familiar with the formula for tax incidence (in a standard Principles framework) from elasticity. Specifically, that the consumer share is $$\frac{\varepsilon_S}{\varepsilon_S+|\...
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792 views

Ranking products according to Price Elasticity Of Demand

Assuming ceteris paribus conditions, rank the following products in order from the most price elastic to the least price elastic. Explain why. Ice Cream Peter’s Chocolate Ice Cream Chocolate Ice ...
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What would be the consequences of universal parity of buying power (wage value) and freedom to buy?

I've wondered about this for many, many, years..... maybe there's an answer (or several answers?) after all. As the global economy is set up, one reason a person in the US and EU can afford a nice ...
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609 views

Is the labor force participation rate related more to labour supply or to labour demand? Or both?

I have read several Labor Economics books, but I am stuck. Is the labor force participation rate related more to the labour supply or to the labour demand? If the labor force participation rate ...
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Quick Question on Production Possibilities Frontier Curve

Can someone please tell me how or why the curve shifts outward. In the textbook, I was given that: "But if we cut production of mobile phones to 3 million this year, we can produce 2 mobile phone ...
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Can Linear Supply-Demand Equilibria Be Understood as a Feedback-Control Process?

I'm not an economist, but rather an applied mathematician working in control theory. I've recently been watching Berkeley's intro to econ course in a personal project to better understand economics ...
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163 views

If the price of a good rises, will the demand always fall?

If the price of a good or service rises, the demand for that product will always fall? Apart from Giffen goods and luxury are there any other cases and what economic analysis supports or argues with ...
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Regarding the units of the shift produced by subsidies on supply curve

I am giving my first steps on microeconomics and I can't fully understand why by applying a per unit subsidy, the supply curve is shifted by a fixed amount. In wikipedia's words: Marginal subsidies ...
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702 views

Explain Basic Supply Demand Graph

Can someone please explain these things? They show up all over the place and it seems people can't be bothered with documenting the labels. Is this showing f(L) = W? Is it showing f(W) = L? If so, ...
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Supply/Demand of Smuggling

I am attempting a (very) basic analysis of smuggling from one economy to the other (Venezuela to Colombia) - arising from price ceilings ceteris paribus. e1 are the equilibria without intervention (...
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When was the supply and demand model first used?

Who created the supply and demand model in economics or when was it first used?
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Worth of collectables - predatory pricing

If I traveled around the world, to collectors shops, finding a specific Coin (or other collectible object) something that had a standard value as well (such as a gold coin) and broke it (later melted ...
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393 views

Very elastic supply + very inelastic demand

Suppose we have a very elastic supply curve and a very inelastic demand curve. Further suppose there is a decrease in input prices which shifts the supply curve outward. By taking an extreme ...
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“The econony needs x workers of profession y”. What does it mean and how is it derived?

I keep hearing that there is not enough of some specialists in economy which is followed by some number. Here's an example: http://www.computerweekly.com/news/2240205466/Economy-needs-300000-digital-...
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567 views

When a tax is imposed on the sellers, the price of the good rises. So, why doesn't the demand curve shift?

A tax imposed by the government on the sellers would drive up the price of the good. I understand that the supply curve will shift upwards due to this but the won't the demand curve also shift ...
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If I want to create my own currency model what would be the best basic options / things / ideas I need to look into? [closed]

First of all, I am from a IT background and currently writing my thesis on a system in which I am have to create a model of a nation. So to run the economy in this simulation (for now you can ...
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Why two goods are of different types of Cross Elasticity if we swap them in formula?

I am using this formula for calculating Cross elasticity of demand: $ E_{XY}^D = \Large\frac{(Q_2^X - Q_1^X)(P_2^Y + P_1^Y)}{(Q_2^X + Q_1^X)(P_2^Y - P_1^Y)} $ If $E_{XY}^D$ > 0 Then goods X and Y ...
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Supply/Demand Curve for Excise tax that's being passed 100% on to consumers

I'm doing a paper on the 'coca-cola tax' the tax on all sugary drinks. The premise is that it is an excise tax, which will then be passed 100% on to consumers. What I'm struggling with is how the ...
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178 views

Question about Changes in Surplus

Will Both Consumer and Producer Surplus decrease as a result of a decrease in demand? Or is this not possible? Assuming there is a decrease in demand for travel, I'd like to know how this affects ...
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212 views

Consumer demand: a function of present endowment?

I don't know about you, but each time I go shopping for groceries, my purchasing decision takes into account what I already have at home. I don't make only one demand decision for my entire life the ...
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Why, in supply and demand curves, does price go on the y-axis?

I know it doesn't actually matter which axis is which, but it seems less intuitive me. When I see a supply and/or demand graph, I always have to flip it in my head to feel like I really get what's ...
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“For a market to exist there must be scarcity” (T/F)

The answer provided was 'true', that scarcity was necessary in the existence of a market. But isn't that not always true? For example, there's a market for canned air, and air is most definitely not ...
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108 views

Whether the demand in the panels satisfies the weak axiom

The Walrasian demand function $x(p,w)$ satisfies the weak axiom of revealed preference if the following property holds for any two price wealth situations $(p,w)$ and $(p',w')$: If $p•x(p',w')\le w$ ...
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What's the significance of the triangular region for calculating the deadweight loss?

I am familiar with the concept of deadweight loss but I can't deduce the significance of the triangular region we consider deadweight loss as. I mean what's the issue with taking the deadweight loss ...
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4answers
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Will price increase as demand increase?

I know the law of demand which states that if price of a product increases then the demand will decrease In this, I think we assume that price is a function of demand. But I feel otherwise i.e. ...
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Questions on supply curve

I need advice on whether on my supply logic is correct. Question 1: Any point on the supply curve indicates the minimum price that a producer must receive in order to supply a specific quantity of ...
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235 views

Question about Equilibrium Price

To find the equilibrium price I understand you set $$ Q^s = Q^d $$ and then solve for p. But as P is not indpendently labeled in $$Q^d$$ I am slightly confused how you would go about writing this ...
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Dynamic demand model in many good competitive markets and price optimization

This is a question about demand models, price optimization, dynamic pricing, big data, online learning, so I will cross-post in other communities. $\mathbf{Background}$ I am interested in dynamic ...
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1answer
30 views

What would be the practicality of a widespread open-source approach in an economy?

I'm not sure how to tag this so feel free to add any tags you see as relevant. The question here is about anything that uses a proprietary approach today and applying open-sourcing to it. What if ...
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Modelling Supply Induced Demand

How would one go about modelling "supply induced demand" (SID) using the regular supply and demand model and how is SID different from price discrimination?
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Interpreting Disequilibrium: Inelastic Supply and Demand at different quantities

How does one go about interpreting a case of inelastic supply and demand that are based at different quantities? There is no equilibrium in such a case and therefore nothing supplied or demanded. ...
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What is the difference between aggregate supply and GDP?

Usually when I read online, I see the following repeated frequently: aggregate demand is equal to GDP. I understand that aggregate expenditures is the aggregate demand at a particular price level, and ...
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Graphing Volunteer labour Supply

I'm wondering if there is a method by which we can visualize a firms decision to rely on volunteer labour. I have an idea but I'm unsure if it is correct, please tell me if there is an issue with my ...
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Why does quantity supplied increase with price in economics?

The Law of Supply is my worst enemy in economics because I could never truly understand it, and as a result, the stuff I learned after that was built on a weak foundation. The Law of Demand is totally ...