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Shape of a supply/demand curve

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10/26/2017 3:11:01 AM
Posted: 2 months ago
The basic theory is presented as a relationship between price and quantity using two lines, one for supply and one for demand. Here's a typical illustration showing a situation where price is too low, and so production doesn't meet consumption:

A linear equation is some function of x, and combining two linear equations results in a function of x^2, a parabola. Here's a plot of two lines and the resulting parabola:*x

If the unit of measure on the y axis is quantity, then the resulting parabola is measured in quantity^2. Or if the unit of measure is the force of want, then the parabola is a somewhat surreal want^2.

* Does the parabola match consumer behavior with respect to price variance?
* Is there some published studies of price-quantity testing on populations?