How Does Supply and Demand Set Prices?
The law of supply says the opposite: when the price goes up, sellers offer more (St.
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1.What does the law of demand say?
The law of supply says the opposite: when the price goes up, sellers offer more (St. Louis Fed).
2.What is the equilibrium price?
In the table both sides want 80 kilos at 2 a kilo, where the curves cross.
3.At a price of 3 a kilo, shoppers want 40 and sellers bring 120. What is left over?
Leo does not want to take tomatoes home to rot, so next week he lowers his price.
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Sources (6)
- Federal Reserve Bank of St. Louis, Page One Economics (David F. Perkis): The Science of Supply and Demand (1.3.2021)
- U.S. Energy Information Administration (EIA), Today in Energy: Low liquidity and limited available storage pushed WTI crude oil futures prices below zero (27.4.2020)
- EIA, Today in Energy: Crude oil prices briefly traded below $0 in spring 2020 but have since been mostly flat (5.1.2021)
- USDA Economic Research Service, Charts of Note: Avian influenza outbreaks reduced egg production, driving prices to record highs in 2022 (11.1.2023)
- USDA Economic Research Service, Charts of Note: Wholesale egg prices tumble as egg supplies recover (11.7.2023)
- Eigene Berechnung (synthetischer Tomatenmarkt, Python)
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