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Poindexterity

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#1

Can anyone explain supply and demand?

06-26-2008, 07:11 PM

since it was 1st explained to me, the basic rule of supply and demand has sounded
like price gouging. Can you explain to me how it is not?

for example,
you have a tree that puts out 10 apples a day.
8 people want apples and buy them from you for a buck a piece every day.
so you make 8 bucks a day.
then one day, all of a sudden, you've got 20 people who want apples
every day. you can either pick the extra two and be happy with
your extra 2 bucks a day, or you can follow the rules of supply and
demand and realize that since demand has gone up, your price should
go up as well, even though it doesnt take you any extra time or money
to get those same damn apples.

how is this not price gouging?
more people need something, so its more expensive?

please, i really want to be proven wrong here.

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#2

06-26-2008, 07:14 PM

if there is someone willing to pay $2 for an apple why should you sell it for $1 ?

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robfantasy

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#3

06-26-2008, 07:15 PM

price elasticity.. look it up

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marketsmart

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#4

06-26-2008, 07:16 PM

Originally posted by sandman!

if there is someone willing to pay $2 for an apple why should you sell it for $1 ?

exactly.. or in the case of oil, something people have to buy...

Last edited by marketsmart; 06-26-2008, 07:18 PM.
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#5

06-26-2008, 07:30 PM

It's a monopoly,just spread your cheeks and squeel once in awhile

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woj

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#6

06-26-2008, 07:34 PM

If you don't raise the price, and continue selling them for $1, what will happen is that some wise guy will appear who will buy all your apples for $1/each, and he will resell them for $2/each... so in the end the price will be $2 anyway...

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PervertInPueblaMexico

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#7

06-26-2008, 07:38 PM

Actually, if you were the only person selling apples, you could sell them for 10 dollars a piece, or whatever the market will bear. The only thing that would prevent you from selling them for 10 dollars would be if you had a competitor selling them for 9 dollars. Then you would have to match or lower his price.
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After Shock Media

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#8

06-26-2008, 08:15 PM

Originally posted by PervertInPueblaMexico

Actually, if you were the only person selling apples, you could sell them for 10 dollars a piece, or whatever the market will bear. The only thing that would prevent you from selling them for 10 dollars would be if you had a competitor selling them for 9 dollars. Then you would have to match or lower his price.

That is not true either as being priced higher is fine in the market place and often beneficial. Have you looked at bottled water. From free (which is fine) to over a hundred a bottle.

Now typically you can sell your shit for whatever you want. Price gouging is not really that big of an issue. Unless of course your product is price regulated (see CA dairy) or for instance there is a natural disaster and there is a price cap put into place.

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PervertInPueblaMexico

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#9

06-26-2008, 08:25 PM

Originally posted by After Shock Media

That is not true either as being priced higher is fine in the market place and often beneficial. Have you looked at bottled water. From free (which is fine) to over a hundred a bottle.

Now typically you can sell your shit for whatever you want. Price gouging is not really that big of an issue. Unless of course your product is price regulated (see CA dairy) or for instance there is a natural disaster and there is a price cap put into place.

Yes, you are absolutely right. I was assuming that the quality of the apples was equal. If you have a better product, you can sell it for more. If you have a better product and sell it for less, even better. I guess the point I was trying to make is that competition is good. We have been having this conversation alot down here, because Pemex is the only gas company in Mexico, government owned. It is coming up for elections whether or not gas should be privatized down here. A lot of controversy over this one, but I think competition is good. Also, if you have more suppliers, the prices generally go down on the average.
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#10

06-26-2008, 08:28 PM

well.. the person selling the goods is not actually setting a price without first finding an "equilibrium price" ... no one is going to buy those dam Apples if he sets it at $10 each... I mean if the opportunity cost is low for the buyers they will buy ...but it is very unlikely.

Price setting relies a lot in pretty much the bidding of your demand so the seller can suggest a price but the buyers are the ones who will decide whether or not the price is right .....

Last edited by qxm; 06-26-2008, 08:29 PM.

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Poindexterity

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#11

06-26-2008, 08:34 PM

Originally posted by woj

If you don't raise the price, and continue selling them for $1, what will happen is that some wise guy will appear who will buy all your apples for $1/each, and he will resell them for $2/each... so in the end the price will be $2 anyway...

ok, i feel ya,
but so what?
you're still making an extra
2 bucks a day.
why is it impossible to
happy with that?
just cause someone else is making
more money than you?

the whole process just seems like a nice cozy
way to cover up raw, straight up greed.

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marketsmart

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#12

06-26-2008, 08:39 PM

Originally posted by PervertInPueblaMexico

Yes, you are absolutely right. I was assuming that the quality of the apples was equal. If you have a better product, you can sell it for more. If you have a better product and sell it for less, even better. I guess the point I was trying to make is that competition is good. We have been having this conversation alot down here, because Pemex is the only gas company in Mexico, government owned. It is coming up for elections whether or not gas should be privatized down here. A lot of controversy over this one, but I think competition is good. Also, if you have more suppliers, the prices generally go down on the average.

This is not the case in Mexico.. The Mexican govt subsidizes the price of gas...
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#13

06-26-2008, 09:06 PM

Greed is good
I sell on ebay a lot, if I list two like items and have two bidders the price stays low, but if I only list one item with two bidders the price goes up

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PervertInPueblaMexico

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#14

06-26-2008, 09:08 PM

Originally posted by marketsmart

This is not the case in Mexico.. The Mexican govt subsidizes the price of gas...

Actually, there is only one gasoline company in Mexico. And it is coming up for a vote whether it will be privatized. Figure, a few years back there was only one phone company here too, Telmex. They privatized that, and prices went down on phone service. But with all of the ads running on TV down here, it's doubtful that gas will be privatized. If something else I said was wrong, that's possible. But the Pemex thing I do have a pretty good grip on. Besides, it would be nice to see a Texaco, Chevron, Shell, something like that down here. I get homesick sometimes. Back on the subject...
High Supply + Low Demand = Low prices
Low Supply + High Demand = High Prices
Monopoly = High Prices
(I remember seeing a documentary on Youtube I think, about diamond prices. Diamonds are actually very common, but there is a monopoly on them, and the stones are only sold in small quantities. That is what caused the illegal market for them, the blood diamonds. The "legitimate" diamond market is cornered by De Beers.) I am all for competition.
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