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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82 views

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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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 ...
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From single-consumer-multi-units to multiple-consumers-single-unit

When I took a course in consumer theory, the economy always had a single consumer, represented by a monotone positive utility function $u(x,y)$ and an income $I$. Given prices $p_x$ and $p_y$, it is ...
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Why do firms bother to produce at equilibrium quantities if at equilibrium quantity, MR < MC?

For almost all demand curves, the resulting marginal revenue curve is often to the left of and steeper than the demand curve. The marginal cost curve has its distinctive U-shape, and a particular ...
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Re-evaluation of Consumer Price Index (C.P.I.) weights

How are the weights of the various household items in the Consumer Price Index (C.P.I.) basket decided, i.e., how are they re-evaluated every year? Is it done manually or automatically? If its done ...
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Can we “prove” that slow growth is due to deficient demand?

We hear more and more these days about growth, particularly in the Eurozone and Britain, being beneath its long-term trend due to deficient demand. I can think of a few things which support that idea -...
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Basic microeconomics: supply, demand and substitutes in production

The question is: explain the change in the market for skim milk, if demand for ice cream rises. I'd say these two are unrelated in consumption (saying they're substitutes is kind of stretching it), ...
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How do you find marginal revenue if you don't have a production function?

I was given a word problem. No formulas. So I set up the following equations: Demand Function \begin{equation} D(p) = a - p \end{equation} Cost Function: \begin{equation} c(q) = 9 + 10q \end{...
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Effect of information on stock indices

The rules for including a stock in indices such as S&P 500 are common knowledge, so everyone can know when e.g. company B is going to enter the index instead of company A. Since ETFs and mutual ...
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Price Elasticity of Demand for Positive Price Increases

What does it mean when the price elasticity of demand %Qd/%P is greater than one? Typically I hear that it means the demand is elastic since if, say, the price decreases by 1% the demand for the ...
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Usage of natural gas in 1970 (where was the demand elasticity?)

The following historical graph of US Marketable Natural Gas volume has me puzzled: How was the gas used in 1970 (a peak production period), given that we would seem to be using a lot more gas now? ...
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When would prices increase according to Malthusianism?

Malthusians and Neo-Malthusians believe that, eventually, the population of the earth will be exceed the number of people able to be sustained by the earth's food production. As such, they advocated ...
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Is this supply and demand reasoning in Picketty's book circular?

In his hugely successful book, Thomas Piketty writes: To be sure, there exists in principle a quite simple economic mechanism that should restore equilibrium to the process: the mechanism of supply ...
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What is the advantage and disadvantage to have a high value of USD for USA?

What is the advantage and disadvantage to have a high value of USD for USA? China and Japan always want to keep their currency low as oppose to USA.
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Analysis of free goods

The normal supply and demand models take the supply and demand of a particular good and show that the equilibrium price is where the two curves intersect. At this point, all the people below the ...
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Is stock investment an example of demand curves that slope upwards?

The law of demand implies that when the price of a good rises, people buy less of it. This makes the demand curve slope monotonically downwards. A textbook exception is the so-called Giffen good that ...
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Is there a class of demand functions that deliver equal surplus to consumers and a monopolist?

Consider a market with a monopolist firm that has zero marginal cost and faces demand $D(p;\mathbf{a})$, where $\mathbf{a}$ is a vector of parameters and $p$ is the price. The monopolist maximizes ...
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What are Giffen Goods?

What exactly are Giffen goods and are they of purely theoretical interest or has there been empirical evidence of their existence?

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