With an unlimited supply, how does demand find equilibrium?

Question

Example … I suppose I (a deprived chocolate lover) get access to an unlimited supply of chocolate when is enough chocolate enough for a chocolate lover???

Answer 1

The other posters are generally correct. But I'd like to answer in pure economic terms.

Demand will find equilibrium when the marginal utility of consumption falls to zero.

Draw the graph...the supply curve you've described is a flat line running horizontally on the x-axis. Infinite quantity can be supplied at zero cost.

The demand curve for any good represents the marginal utility curve for that good. The downward slope of the demand curve represents declining marginal utility of consumption of the good.

Draw the demand curve: Equilibrium occurs where the demand curve crosses the x-axis, which is also the supply curve. All units of the good will be consumed that have positive marginal utility. Q is the point on the x-axis where the curves cross, and P is zero.

Answer 2

Usually supply is limited.
In such a case, an (almost) unlimited demand rises prices until a balance is found.

In the case of unlimited supply, you will find that the demand is limited.
Therefore the price drops, because everybody can take their fill.

Take, for instance, air. The supply is unlimited, but no-one has any use for more than what he or she can breathe. So there are no clever salesmen storing it and selling it to people because people can take what they need from the unlimited supply around them.

Same goes for chocolate: If the supply is really far more than the demand, prices will hit rockbottom.
In such a case, the price can not fall below the absolute minimum that is required to produce and transport the chocolate.
Either the industry will start stockpiling the chocolate so that less reaches the market and prices go up again; or the industry will continue to produce it at next to zero profit. Some companies will go out of business; the others can not keep up with the demand and demand overstretches supply again.

But if you really find yourself in an all-you-can-eat chocolate shop, and I offer you a bar of chocolate for a dime, I suppose you would say "no thanks I have had my fill".
The limit in that case is what the market can consume, and the product would have no value.

Answer 3

How much stuff a person can actually consume is usually limited by time and biology if there are no other constraints. Air, use of parks, libraries, roads and sidewalks are unlimited and in many places so is drinking water, TV watching, use of the Internet, and local telephone service (once you have a connection). At some point even chocolate lovers would stop eating. Some people have so much money that cost does not serve to limit their consumption, but they do not eat more food than the rest of us.

Answer 4

In your personal situation, you would probably have enough when you cannot eat anymore, due to fullness, or the fact that you no longer view it as a treat, or your doctor warns you of the health hazards. Then you would find equilibrium.

Just about Everything tangible costs money. Water may be seen as an unlimited supply, however it costs money to pump it to customers, and dipose via sewers. Thus, the supply is limited to what the demand level is- it finds equilibrium due to the storage costs for excess water...