So, you open a chart and see a sharp move down. How do you know whether demand has reduced sharply or supply has increased sharply or both? Thanks!
it makes no difference. youre asking if water is clear or transparent.
supply and demand are two sides of one and the same coin. its the same coin your holding in your hands u just sometimes look at one side sometimes at the other. and its not important at which side youre looking.
it is the same terminus. supply and demand is one thing not two seperate.
+1 to Turbo.
Also, what are you trying to gain by asking such a question? What is it that you’re trying to understand?
Thanks for the reply! I am not sure if I understand you correctly, though. Could you give me some further explanation, possibly with an example?
The way I see it, let’s use cars for my example.
Let’s say people start buying some model of a car and price rises a lot. We have a few sellers of the specific model but as demand increases(more & more people start to want that model, AKA herd behaviour), then all the other car dealers plunge into selling that same very model and they easily exceed the demand and price starts falling fast.
On the other hand, let’s say that all the other car dealers did not notice on time that this model is demanded a lot and missed the “trend” and so prices have risen a lot already, and people don’t want to buy anymore, as the price is way too high… The dealers stay the same, the number of cars they sell is again the same. Prices drop substantially, though. The supply is absolutely the same as before the only difference is that the prices are super high.
So, correct me if I am wrong but this is the way I see price moves(in any market). Am I missing anything? Thanks again!
I guess that you read my example with the cars. So, I think that in the first case(a lot of new car dealers start selling the same model) the price of the car might even go much lower than it was initially sold for, due to high competition between the dealers. While if no new car dealers start selling, the price might go down a bit and find equilibrium with demand and even go higher again, or worst case go back to its initial price. Eventually no matter how few the dealers selling the model are, if they continue selling same number of cars, price will fall down lower than the initial but this will take much more time than if the new dealers step into the game.
youre correct. everything always finds a buyer, no matter what product. the only difference is the price.
like in ur car dealer example: have you ever seen a car dealer location with a 20 years old car where the dealer says “jezzz it cant be sold i have it for 20 years on my show room noone wants to buy it”. doesnt happen.
thats supply vs demand= at the right price everythibg gets sold. if something is rare it gets sold on high price till the price reaches a point where there are not enough people interested in that product anymore. like old vintage cars for example.
if there are thibgs that are not rare and not interesting to enough people the price drops ubtill there are enough people who are interested.
the supply can stay the same or can vary but thats jist the same as playibg with the price= if supply to low and therefore prices high increase supply and prices will drop.