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Supply and Demand

riyo
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4/11/2012 10:07:21 AM
Posted: 4 years ago
This should probably have went into the economics slot but it just looks so abandoned that I will place it here for hopes of a better response.

Logical states that if supply goes down, then price will go up because of a scarcity. Assuming that demand stays constant.

However, the graph of supply and demand seems to say that as supply goes down, then price will also go down.

Which one of these is correct because I am very confused?
Stephen_Hawkins
Posts: 5,316
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4/11/2012 10:11:43 AM
Posted: 4 years ago
The supply demand graph states that as supply goes down, demand goes up. The distance from equilibrium represents the change of price. As price goes up, demand goes down at that price, and supply increases (as more can compete at that price), so price goes down. Or the opposite: as price goes down, supply goes down (as less can compete at that price), and demand goes up, so the price increases.
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Lordknukle
Posts: 12,788
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4/11/2012 10:44:21 AM
Posted: 4 years ago
At 4/11/2012 10:11:43 AM, Stephen_Hawkins wrote:
The supply demand graph states that as supply goes down, demand goes up. The distance from equilibrium represents the change of price. As price goes up, demand goes down at that price, and supply increases (as more can compete at that price), so price goes down. Or the opposite: as price goes down, supply goes down (as less can compete at that price), and demand goes up, so the price increases.

So basically the graph has no relation to

Supply----->Price

or Demand------>Price.

Instead it only relates to

Price------->Supply and demand

Am I correct?
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
Lordknukle
Posts: 12,788
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4/11/2012 10:45:02 AM
Posted: 4 years ago
This question was rather annoying for me also.

I hated the Supply and Demand thing.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
Reasoning
Posts: 4,456
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4/11/2012 11:46:06 AM
Posted: 4 years ago
At 4/11/2012 10:07:21 AM, riyo wrote:
This should probably have went into the economics slot but it just looks so abandoned that I will place it here for hopes of a better response.

Logical states that if supply goes down, then price will go up because of a scarcity. Assuming that demand stays constant.

However, the graph of supply and demand seems to say that as supply goes down, then price will also go down.

Which one of these is correct because I am very confused?

No, you have it backwards. The Supply and Demand chart shows buyers and sellers reaction to different prices. At high prices, the top of the chart, there are few buyers and many sellers, at low prices, the bottom of the chart, there are many buyers but few sellers. The point where the number of sellers, or rather the number of goods sold, equals the number of buyers, or the number of goods demand at that price, is the intersection of the two curves.

If there is a negative supply shock, the supply curve shifts to the left, which signifies a higher equilibrium price.

http://edu.glogster.com...
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
Reasoning
Posts: 4,456
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4/11/2012 11:49:10 AM
Posted: 4 years ago
At 4/11/2012 10:11:43 AM, Stephen_Hawkins wrote:
The supply demand graph states that as supply goes down, demand goes up. The distance from equilibrium represents the change of price. As price goes up, demand goes down at that price, and supply increases (as more can compete at that price), so price goes down. Or the opposite: as price goes down, supply goes down (as less can compete at that price), and demand goes up, so the price increases.

No. That's not what is states at all. Especially your bit about "distance from equilibrium." An equilibrium price is necessarily in equilibrium and so has a distance of 0 from equilibrium.
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
DanT
Posts: 5,693
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4/11/2012 12:43:50 PM
Posted: 4 years ago
At 4/11/2012 10:07:21 AM, riyo wrote:
This should probably have went into the economics slot but it just looks so abandoned that I will place it here for hopes of a better response.

Logical states that if supply goes down, then price will go up because of a scarcity. Assuming that demand stays constant.

However, the graph of supply and demand seems to say that as supply goes down, then price will also go down.

Which one of these is correct because I am very confused?

If demand increases and supply remains unchanged, then it leads to higher equilibrium price and higher quantity.
If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and lower quantity.
If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.
If supply decreases and demand remains unchanged, then it leads to higher equilibrium price and lower quantity.

Both supply and demand determines the price.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
Lordknukle
Posts: 12,788
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4/11/2012 3:49:40 PM
Posted: 4 years ago
At 4/11/2012 12:43:50 PM, DanT wrote:
At 4/11/2012 10:07:21 AM, riyo wrote:
This should probably have went into the economics slot but it just looks so abandoned that I will place it here for hopes of a better response.

Logical states that if supply goes down, then price will go up because of a scarcity. Assuming that demand stays constant.

However, the graph of supply and demand seems to say that as supply goes down, then price will also go down.

Which one of these is correct because I am very confused?

If demand increases and supply remains unchanged, then it leads to higher equilibrium price and higher quantity.
If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and lower quantity.
If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.
If supply decreases and demand remains unchanged, then it leads to higher equilibrium price and lower quantity.

Both supply and demand determines the price.

You sure those are correct?

I'm pretty sure it's the other way around.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
DanT
Posts: 5,693
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4/11/2012 4:03:23 PM
Posted: 4 years ago
At 4/11/2012 3:49:40 PM, Lordknukle wrote:
At 4/11/2012 12:43:50 PM, DanT wrote:
At 4/11/2012 10:07:21 AM, riyo wrote:
This should probably have went into the economics slot but it just looks so abandoned that I will place it here for hopes of a better response.

Logical states that if supply goes down, then price will go up because of a scarcity. Assuming that demand stays constant.

However, the graph of supply and demand seems to say that as supply goes down, then price will also go down.

Which one of these is correct because I am very confused?

If demand increases and supply remains unchanged, then it leads to higher equilibrium price and higher quantity.
If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and lower quantity.
If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.
If supply decreases and demand remains unchanged, then it leads to higher equilibrium price and lower quantity.

Both supply and demand determines the price.

You sure those are correct?

I'm pretty sure it's the other way around.

sorry, thanx for correcting me. That was a typo.

The higher the demand the higher the price, the lower the quantity
The lower the demand the lower the price, the higher the quantity
http://i.investopedia.com...
The higher the supply the higher the equilibrium
The lower the supply the lower the equilibrium
http://i.investopedia.com...
"Chemical weapons are no different than any other types of weapons."~Lordknukle
Thaddeus
Posts: 6,985
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4/11/2012 4:04:00 PM
Posted: 4 years ago
At 4/11/2012 3:49:40 PM, Lordknukle wrote:
At 4/11/2012 12:43:50 PM, DanT wrote:
At 4/11/2012 10:07:21 AM, riyo wrote:
This should probably have went into the economics slot but it just looks so abandoned that I will place it here for hopes of a better response.

Logical states that if supply goes down, then price will go up because of a scarcity. Assuming that demand stays constant.

However, the graph of supply and demand seems to say that as supply goes down, then price will also go down.

Which one of these is correct because I am very confused?

If demand increases and supply remains unchanged, then it leads to higher equilibrium price and higher quantity.
If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and lower quantity.
If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.
If supply decreases and demand remains unchanged, then it leads to higher equilibrium price and lower quantity.

Both supply and demand determines the price.

You sure those are correct?

I'm pretty sure it's the other way around.

Definitely not. Imagine when one shifts, it shifts along the stationary curve.
DanT
Posts: 5,693
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4/11/2012 4:05:00 PM
Posted: 4 years ago
At 4/11/2012 4:03:23 PM, DanT wrote:
At 4/11/2012 3:49:40 PM, Lordknukle wrote:
At 4/11/2012 12:43:50 PM, DanT wrote:
At 4/11/2012 10:07:21 AM, riyo wrote:
This should probably have went into the economics slot but it just looks so abandoned that I will place it here for hopes of a better response.

Logical states that if supply goes down, then price will go up because of a scarcity. Assuming that demand stays constant.

However, the graph of supply and demand seems to say that as supply goes down, then price will also go down.

Which one of these is correct because I am very confused?

If demand increases and supply remains unchanged, then it leads to higher equilibrium price and higher quantity.
If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and lower quantity.
If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.
If supply decreases and demand remains unchanged, then it leads to higher equilibrium price and lower quantity.

Both supply and demand determines the price.

You sure those are correct?

I'm pretty sure it's the other way around.

sorry, thanx for correcting me. That was a typo.

The higher the demand the higher the price, the lower the quantity
The lower the demand the lower the price, the higher the quantity
http://i.investopedia.com...
The higher the supply the higher the equilibrium
The lower the supply the lower the equilibrium
http://i.investopedia.com...

It was a typo, sometimes I get a word stuck in my head, and it messes up my typing.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
Thaddeus
Posts: 6,985
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4/11/2012 4:06:37 PM
Posted: 4 years ago
At 4/11/2012 4:04:00 PM, Thaddeus wrote:
At 4/11/2012 3:49:40 PM, Lordknukle wrote:
At 4/11/2012 12:43:50 PM, DanT wrote:
At 4/11/2012 10:07:21 AM, riyo wrote:
This should probably have went into the economics slot but it just looks so abandoned that I will place it here for hopes of a better response.

Logical states that if supply goes down, then price will go up because of a scarcity. Assuming that demand stays constant.

However, the graph of supply and demand seems to say that as supply goes down, then price will also go down.

Which one of these is correct because I am very confused?

If demand increases and supply remains unchanged, then it leads to higher equilibrium price and higher quantity.
If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and lower quantity.
If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.
If supply decreases and demand remains unchanged, then it leads to higher equilibrium price and lower quantity.

Both supply and demand determines the price.

You sure those are correct?

I'm pretty sure it's the other way around.

Definitely not. Imagine when one shifts, it shifts along the stationary curve.

Lol. Made the same mistake as Dan
DanT
Posts: 5,693
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4/11/2012 4:57:29 PM
Posted: 4 years ago
At 4/11/2012 4:06:37 PM, Thaddeus wrote:
At 4/11/2012 4:04:00 PM, Thaddeus wrote:
At 4/11/2012 3:49:40 PM, Lordknukle wrote:
At 4/11/2012 12:43:50 PM, DanT wrote:
At 4/11/2012 10:07:21 AM, riyo wrote:
This should probably have went into the economics slot but it just looks so abandoned that I will place it here for hopes of a better response.

Logical states that if supply goes down, then price will go up because of a scarcity. Assuming that demand stays constant.

However, the graph of supply and demand seems to say that as supply goes down, then price will also go down.

Which one of these is correct because I am very confused?

If demand increases and supply remains unchanged, then it leads to higher equilibrium price and higher quantity.
If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and lower quantity.
If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.
If supply decreases and demand remains unchanged, then it leads to higher equilibrium price and lower quantity.

Both supply and demand determines the price.

You sure those are correct?

I'm pretty sure it's the other way around.

Definitely not. Imagine when one shifts, it shifts along the stationary curve.

Lol. Made the same mistake as Dan

No I made a typo. Look back at my previous posts. I got it right in a different thread. In this thread I had a typo.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
DanT
Posts: 5,693
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4/11/2012 4:58:46 PM
Posted: 4 years ago
At 4/11/2012 4:04:00 PM, Thaddeus wrote:
At 4/11/2012 3:49:40 PM, Lordknukle wrote:
At 4/11/2012 12:43:50 PM, DanT wrote:
At 4/11/2012 10:07:21 AM, riyo wrote:
This should probably have went into the economics slot but it just looks so abandoned that I will place it here for hopes of a better response.

Logical states that if supply goes down, then price will go up because of a scarcity. Assuming that demand stays constant.

However, the graph of supply and demand seems to say that as supply goes down, then price will also go down.

Which one of these is correct because I am very confused?

If demand increases and supply remains unchanged, then it leads to higher equilibrium price and higher quantity.
If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and lower quantity.
If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.
If supply decreases and demand remains unchanged, then it leads to higher equilibrium price and lower quantity.

Both supply and demand determines the price.

You sure those are correct?

I'm pretty sure it's the other way around.

Definitely not. Imagine when one shifts, it shifts along the stationary curve.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
Wallstreetatheist
Posts: 7,132
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4/11/2012 7:16:05 PM
Posted: 4 years ago
An decrease in the supply means the supply curve shifts left, pushing the equilibrium price higher.

So, decreased supply = increased price.

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Contra
Posts: 3,941
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4/11/2012 7:29:52 PM
Posted: 4 years ago
At 4/11/2012 11:46:06 AM, Reasoning wrote:
At 4/11/2012 10:07:21 AM, riyo wrote:
This should probably have went into the economics slot but it just looks so abandoned that I will place it here for hopes of a better response.

Logical states that if supply goes down, then price will go up because of a scarcity. Assuming that demand stays constant.

However, the graph of supply and demand seems to say that as supply goes down, then price will also go down.

Which one of these is correct because I am very confused?

No, you have it backwards. The Supply and Demand chart shows buyers and sellers reaction to different prices. At high prices, the top of the chart, there are few buyers and many sellers, at low prices, the bottom of the chart, there are many buyers but few sellers. The point where the number of sellers, or rather the number of goods sold, equals the number of buyers, or the number of goods demand at that price, is the intersection of the two curves.

If there is a negative supply shock, the supply curve shifts to the left, which signifies a higher equilibrium price.

http://edu.glogster.com...

This says it the best. The equilibrium point is where the Supply and demand curves meet.
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