Supply and demand curves

Discussion in 'Random Thoughts' started by TheChaosFactor, Jan 18, 2005.

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  1. TheChaosFactor

    TheChaosFactor Senior Member

    Not that I'm complaining as a consumer, but these people running todays businesses are going about it all wrong. For those of you who know what it is, try to follow me:

    Say for example the equillibrium for bushels of oats of $4 per unit, resulting in 2 million units sold. This results in a gain of $8 million. Now if at $7.75 per unit they'd only sell 1 million units, they'd still have 1/2 their product left, and be less than a million dollars shy of the original gain. Wouldn't it make more sense for them to sell of the one million units for $7 and the last million for $4 to come out with a gain of $11 million?

    Again, as a consumer I have no complaint, but I find this method to be a very odd one.
  2. mystical_shroom

    mystical_shroom acerbic

    whoa too many numbers :D sounds like one of them crazy math problems..
  3. TheChaosFactor

    TheChaosFactor Senior Member

    Economics, but yes math is involved. Basically I'm saying why charge low to sell more, when you can charge higher, sell less, make the same, and have more left to sell at a lower cost later.
  4. fitzy21

    fitzy21 Worst RT Mod EVAH!!!!

    if your only talking about 1 company selling bushels: well, if they happen to charge $7.75 per unit, they risk losing customers to a substitute product and even if you drop the price, people might not go back to your product.

    if your talking about the overall market for bushels: then you would be getting into some funky theories for this scenario.

    but basically, a company wants to maximize profits, while keeping the customer happy....thats why strange changes in price isn't good for business.
  5. ihmurria

    ihmurria fini

    besides, supply and demand curves don't really factor in government involvement for finding the equilibrium point. Agriculture especially is fucked up by the government when comes to prices and amounts they can sell (let alone how they can sell it!). So probably, they can't sell it for less than that amount, or else they're only allowed to sell x much wheat.
  6. TheChaosFactor

    TheChaosFactor Senior Member

    I'm not just talking about bushels. Take XBOX/PS2 for example. They were supposed to be $400 but dropped to $300 before they were even released. Sure the initial sales would've been lower, but profits would've been just as high, if not higher, since they'd only have to sell 3/4 as many to reach the same profit margin and they would've had all the excess to sell at the lower price of $300 to increase the profits even further. Like I said, I have no complaints, I just don't understand it.

    Also, I understand they can't just jack up the price out of nowhere because of competition, but as a whole I don't understand their thinking.
  7. TheChaosFactor

    TheChaosFactor Senior Member

    Yeah, I should've thought about goverment farming regulations before I decided to use a cash crop as an example.
  8. fitzy21

    fitzy21 Worst RT Mod EVAH!!!!

    Not neccesarily, if they kept the price at $400, few people would have bought the XBox/PS2 at that time because the price is too high. they realized before they released them that few people would have bought it that the amount of profit they would have made would be marginal compared to what they made after dropping the price. with the tecnology field, companies are pretty much forced to lower prices so that they don't only sell to a "small" customer group. technology advancements increase day by day, which allow prices to drop.
  9. TheChaosFactor

    TheChaosFactor Senior Member

    even making the initial price $400 for the opening two weeks would've made a substantial difference in their profit. One, it's high dollar opening sales, and two, not only would EVERYBODY who bought it at $300 by it when it dropped, some people would be pursuaded to go ahead and get it since the price was lowered. Just my opinion, but I'm going to work now. So everybody, come join in AN INTELLIGENT conversation instead of flaming like retards and I'll rebuttle when I return :eek: ;)
  10. TheChaosFactor

    TheChaosFactor Senior Member

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