Supply and demand.?

Question

I was thinking about this concept and came to some confusing ideas. If product demand is low price shuold go up, or should they go down to encourage sales?.. if demand is high, price should go down, then again it should go up to make greater profit and to cope with extra production cost..

Answer 1

If demand is low, the price will fall, and the quantity produced will fall (producers, seeing the lower price, are not as inclined to produce as much of a product, or in other words, spend as many resources producing a product).

If demand increases, given the same supply curve, the price will increase along with the quantity supplied.

I think your initial inclinations were wrong, and your logical secondary ones were right.

Answer 2

You have it backwards. If demand is higher than the supply the price goes up. Like when the X-Box came out, people would pay more than retail on e-bay because the couldn't get them at Best Buy.

If the demand is low, you answered your own question; lowering the price potentially adds "incentive value" to purchase a product for which the demand is low.

It is an "inemprical concept" to say that raising the price creates demand. That is a psychological "marketing construct" and not in line with the practical mathematics of economic theory.

Answer 3

No you have got this thing all wrong, and are complicating the laws of supply and demand. For instance gold is a rare metal therefore it follows that the price will be high, compared to a grain of rice which is plentiful so the price is low. Although, "buy them cheap pile them up and sell them" still does not create more demand, no matter what the quality is.
If you read a bit about marginal utility, that better explains how a price is arrived at and how. It is how a market place works.

Answer 4

As I see it, it can go both ways since not every supply and demand situation is the same. Though, if demand is low, price should be low to encourage the sales so you can raise the price later once the product catches on and supply increases. It is competition that lowers the price.

Answer 5

First of all you have it backwards. If demand is up and supply is down prices will rise. Look at things like new game systems that are in short supply. People will pay will over MSRP to get them.

If supply is up and demand down then prices will fall. Why would someone pay top dollar for something if there is tons of product available, like houses these days.

Then you have things that are price inelastic. Things like Gasoline, Cigarettes, Milk and the like. You will buy them no matter what the cost. If gas is at $3 a gallon, people might curtail their driving a bit, but they will still buy gas.

Answer 6

Supply, demand, and price vary depending upon the goods and services.
Other thoughts and concepts which will enter in to the equation are: repeat business, economic realities, or even federal regulation.

Answer 7

If the supply for an item is low...the price goes up because they are 'rare' and hard to get. If there are a million of one item, the price goes down cause store will compete for your buck. I sometimes get confused and think of the movie with Arnold swartsenager with the turbo man dolls where everyone is tackling people for the toy.

Answer 8

Demand means something different to economists. If you're going to talk about economic demand, you have to know what economists think of the word demand.

Answer 9

supply and demand is a concept

try this website great explanation

www.netmba.com/econ/micro/supply-demand