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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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400 views

### How to interpret income elasticity of demand

My question: Income elasticity of demand for apple is $\gamma$. Cross elasticity of demand between apple quantity and orange price is $\psi$, What is the impact on apple's revenue if consumers'...
407 views

### Usefulness of the value for the slope of the demand curve

I see the elasticity value(s) of demand being used frequently to determine the relation between demand and variables such as price and income. I have however been unable to find any uses for the slope ...
154 views

### Unitary demand curve: p = 1 - q

In my text book, many theories are explained using ad unitary demand curve: a consumer can buy 1 quantity of the product, or none. The example of the demand function is $p(q) = 1- q$ but that means ...
670 views

### My Challenge in Econ 101 explanation of Marginal Benefit = Marginal Cost

In Econ 101 textbooks, there are lots of examples and emphasis on marginal analysis leading to the greatest equation of all, $MB=MC$. My challenge is the following and wonder if anyone had a similar ...
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### Demand curve deriviation

My fundamental concern is whether in real life when applying to microeconomic theory, we derive the demand curve using utility and indifference curves approach, or we simply may get data on quantity ...
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### Empirical Evidence of Cournot Competition?

Is there empirical evidence to validate the use of Cournot competition between multiple suppliers and a buyer? Are there models which extend Cournot competition to different levels in a larger supply ...
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### How helpful is Hotelling's Rule in determining the price of oil?

After posting this question, I realized that there was quite a bit of controversy surrounding the use of Hotelling's Rule to estimate the price of oil. Participants on this site seemed to be evenly ...
6k views

### Determine the homogeneity of a demand function

If a demand function $X(P_X, P_y, I)$ depends only on prices and income. Is this function a homogeneous function?
2k views

### Market equilibrium and pareto efficiency

How can I prove that the equilibrum point $D(p)=S(p)$ is pareto efficient? The definition of pareto efficient: there is no way to make any person better off without hurting anybody else $D(p)$ is ...
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### Can supply and demand curves be used in electricity modelling? [closed]

Can the (Supply and Demand) curves be implemented in electricity modelling for a country ? How can this be modelled and how can the user set the interaction point between supply and demand?
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### Textbook claims that price level accompanied by decrease in interest rates?

I read from this textbook the following, quoted as: In addition, a decline in the price level is usually accompanied by a fall in the rate of interest... I interpret this as meaning: "A fall in ...
46 views

### Estimating Demand for Goods with n Choices

I have a data set containing n observations (rows) of mobile applications. The dependent variable is the number of installations -- the variable is categorical (with more than 2 categories). Therefore ...
125 views

### What tools are available to understand situations where the supply curve is clearly a function of the demand curve?

Consider the "Matrix Regurgitated: Coming Only To Cinemas" market: Buyers. People who would potentially be willing to spend money to watch a 4th Matrix film in cinemas, if ever such a film were ...
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### Which of the following explains that the price increase of oil cause the price of natural gas to increase?

A) Oil is inferior good while natural gas is normal good. B) Both of them are normal good. C)They are substitute goods and the higher price for oil increased the demand for natural gas. D)They are ...
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### Can overreporting the oil production cause a fall of the oil prices

The top news today is a discovery that oil production was overreported by 800 thouthand barrel a day. Could it cause 5x price fall during the year? Such allegations challenge the market theory, IMO, ...
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### Is there a simple way to write a model with firms/sectors with different demand elasticities?

I would like to write down a model where there are firms with different demand elasticities: For some firm's total profits increase and decrease a lot with increases and decreases in demand for their ...
11k views

### Finding labor supply function from equation of labor market [closed]

The supply side of the labour market is given by the following set of equations: Utility of worker is given by $$U = L^{\frac{1}{2}}C^{\frac{1}{2}}.$$ Real wage $w = 5$, T-Max = 40 hours, Investment ...
196 views

### How do we prevent big companies conspiracy?

These days we can see a bunch of troubling trends. Consumer goods are less quality. Big companies merge. Patent laws and strict requirements on appearance remove small entrepreneurs from the ...
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### What Does “Quantity” Represent When Looking at Supply and Demand?

There are several possible scenarios involving changes in supply and demand that people are supposed to memorize in AS Economics. For example, when Either Demand OR Supply Move on Their Own: Rising ...
2k views

### What does an individual's demand function describe?

Now, this seems a super easy and straightforward question, right? From wikipedia: The demand curve is the graph depicting the relationship between the price of a certain commodity and the amount ...
487 views

### Demand Curves for Stocks

i am currently working on a paper on demand curves for stocks and have some questions. I've read that many models (CAPM, APT, Modigliani-Miller theorem) assume demand curves for stocks to be flat. Can ...
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### Market with substitutes: Response of prices and quantities

The demand function for theater tickets is $D_t(p_t,p_c)$, where $p_t$ stands for the price of theater tickets and $p_c$ stands for the price of cinema tickets. Supply of theater tickets is described ...
885 views

### Why do firm output decreases when fixed cost decreases in Long Run?

So in long run if fixed cost is lowered, more firms enter the industry and increase the supply, bringing up industrial output. According to the firm diagram, Average Cost lowered so that the firm ...
14k views

### Tax imposed on customer affects demand or supply curve?

I have a example of supply and demand. If there is a regulation that requires customers to pay additional tax when they purchase cigarettes, would supply or demand curve shift? I know that tax/...
9k views

### How does Black Friday work?

On days like Black Friday, everyone rushes out expecting huge savings on everything they buy. The level of demand seems to reach ludicrous levels, and one would expect smart merchants to react by ...
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### Is HIV An Economic Positive In Light of Human Overpopulation? [closed]

A few economists say that the human population is too high and if it continues to grow, may become too large for our planet to sustain it. While others can debate whether this is true or not, let's ...
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### Removal of tax excise on producers, will increase supply?

If the government removes an excise tax on producers, will their supply increase? For example, Price of gasoline is \$2 a gallon Producers are taxed at 50 cents per gallon by the government Weekly ...
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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: ...