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blankseplocked Laws of Supply and Demand
 
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Azhpol
Gallente
Casa Del Wombat
Posted - 2011.04.06 11:39:00 - [1]
 

Ok, starting this thread so there is an easy link to give people who don't understand how markets work. I don't claim to be any good at them, but for gods sake, I learned basic supply and demand principles in high school at the latest.

So, all our marketeers who run this stuff, please contribute to this thread with explanations of how the system works, with small, easy to understand words, and hopefully links to actual econ lectures for people who want to get more than a basic understanding of how it works.

Oh, the target people to get to read this(not post, but read) are people like our current wave of miners who believe allowing them to mine more will make mining more profitable, not understanding how flooding the market will hurt them.

To shutting down ignorance once and for all!!! Rolling Eyes

Atima
Minmatar
House of Marbles
Posted - 2011.04.06 11:48:00 - [2]
 

when moar people want to buy stuff and the same ammount of people want to sell stuff the price goes up

when moar people want to sell stuff and the same ammount of people want to buy stuff the price goes down


Azhpol
Gallente
Casa Del Wombat
Posted - 2011.04.06 12:07:00 - [3]
 

Originally by: Atima
when moar people want to buy stuff and the same ammount of people want to sell stuff the price goes up

when moar people want to sell stuff and the same ammount of people want to buy stuff the price goes down




Guess this means I am gonna have to find my own dam links to put in this thread ;)

Caldari FTW123
Posted - 2011.04.06 12:14:00 - [4]
 

Originally by: Azhpol
Ok, starting this thread so there is an easy link to give people who don't understand how markets work. I don't claim to be any good at them, but for gods sake, I learned basic supply and demand principles in high school at the latest.

So, all our marketeers who run this stuff, please contribute to this thread with explanations of how the system works, with small, easy to understand words, and hopefully links to actual econ lectures for people who want to get more than a basic understanding of how it works.

Oh, the target people to get to read this(not post, but read) are people like our current wave of miners who believe allowing them to mine more will make mining more profitable, not understanding how flooding the market will hurt them.

To shutting down ignorance once and for all!!! Rolling Eyes


Why does your signature link back to this thread with nothing relevant to the signature posted in it?

p.s. if you want to start a knowledge sharing thread, to avoid getting NOTHING but trolls it might help if you put some effort in of your own instead of "I see this problem and it annoys me, you guys go solve it .. now!"

Lando Antilles
Posted - 2011.04.06 12:48:00 - [5]
 

Edited by: Lando Antilles on 06/04/2011 12:48:13
Originally by: Caldari FTW123
Why does your signature link back to this thread with nothing relevant to the signature posted in it?

p.s. if you want to start a knowledge sharing thread, to avoid getting NOTHING but trolls it might help if you put some effort in

+1 ...and ouch

um, i guess that makes me pot?

Azhpol
Gallente
Casa Del Wombat
Posted - 2011.04.06 14:12:00 - [6]
 

Originally by: Caldari FTW123
Originally by: Azhpol
Ok, starting this thread so there is an easy link to give people who don't understand how markets work. I don't claim to be any good at them, but for gods sake, I learned basic supply and demand principles in high school at the latest.

So, all our marketeers who run this stuff, please contribute to this thread with explanations of how the system works, with small, easy to understand words, and hopefully links to actual econ lectures for people who want to get more than a basic understanding of how it works.

Oh, the target people to get to read this(not post, but read) are people like our current wave of miners who believe allowing them to mine more will make mining more profitable, not understanding how flooding the market will hurt them.

To shutting down ignorance once and for all!!! Rolling Eyes


Why does your signature link back to this thread with nothing relevant to the signature posted in it?

p.s. if you want to start a knowledge sharing thread, to avoid getting NOTHING but trolls it might help if you put some effort in of your own instead of "I see this problem and it annoys me, you guys go solve it .. now!"


1 My sig was hoping to get a response
2 Trolls amuse me, if all this ends up being I'll change what the sig link says to fit.
3 The ability to see a need and the ability to fulfill the needs are 2 different things, in this case I happen to lack the latter, but happen to know that this particular forum has plenty of people who don't share that lack. Doing this for money is a specialized form of management consulting and can frequently be quite lucrative, even if unsolicited.

In the end thought I would help, but like the trolls anyway(thanks for calling them in, seems to me the run eve-searches of the word troll Laughing)

SencneS
Rebellion Against Big Irreversible Dinks
Posted - 2011.04.06 16:17:00 - [7]
 

I think it's because the concept of supply vs demand is so simple that a thread dedicated to it is redundant. You said it yourself, "I learned the basic supply and demand principles in high school."

Most people in MD are older, EVE itself appeals to a lot of the older generation gamers. It stands to reason that a majority of people understand simple concepts.

Atima's post although a little playacting, is the most basic definition of the concept.


1) If more people buying something the price goes up. (This is the most popular and the largest driving force)
2) If people want to buy something and the vendor is unable to procure it for sale, the price goes up. (This is secondary drive force)
3) If less people sell something the price goes up. (In EVE this can happen if the seller notices, usually though they tend to keep the price level, or slowly raise the price over time.)

1) If more people sell something the price goes down. (This is the most popular and the largest driving force)
2) If less people buy something the price goes down. (This is secondary drive force)
3) If people want to buy something and the vendor is able to procure more of it for sale, the price goes down. (This can happen, but is likely not to as in EVE, storage is free, and if product is selling at a good rate, there is no reason to sell it cheaper.)

That's Supply and Demand in a nutshell.

Satchils
Posted - 2011.04.06 17:32:00 - [8]
 

Hmm I have a question.

If we take a look at Tritanium:
Eve Central - Tritanium

We see that the quantity supplied ( 83,873,196,457 units ) is much less than the quantity demanded ( 324,153,639,421 units ).
A shortage is a situation in which the quantity demanded is greater than the quantity supplied AT A GIVEN PRICE. The median selling price of trit is 3.25isk, while the median buying price is 2.60isk. Is the reason there isn't a shortage of trit because producers are unwilling to lower their prices to match the consumers' demand? I don't see why the price doesn't fall, who is accepting the 3.25isk price to let producers keep it at that price? Perhaps I'm missing something, but I suppose that's why I posted this here.

Ludacrys
Posted - 2011.04.06 17:56:00 - [9]
 

Originally by: Satchils
Hmm I have a question.

If we take a look at Tritanium:
Eve Central - Tritanium

We see that the quantity supplied ( 83,873,196,457 units ) is much less than the quantity demanded ( 324,153,639,421 units ).
A shortage is a situation in which the quantity demanded is greater than the quantity supplied AT A GIVEN PRICE. The median selling price of trit is 3.25isk, while the median buying price is 2.60isk. Is the reason there isn't a shortage of trit because producers are unwilling to lower their prices to match the consumers' demand? I don't see why the price doesn't fall, who is accepting the 3.25isk price to let producers keep it at that price? Perhaps I'm missing something, but I suppose that's why I posted this here.


well i cant speak for trit but ive found most buy orders for products that can be manufactured to be ridiculously low. like net loss if sold to those orders low.

Letrange
Minmatar
Red Horizon Inc
Cascade Imminent
Posted - 2011.04.06 18:38:00 - [10]
 

Originally by: Ludacrys
Originally by: Satchils
Hmm I have a question.

If we take a look at Tritanium:
Eve Central - Tritanium

We see that the quantity supplied ( 83,873,196,457 units ) is much less than the quantity demanded ( 324,153,639,421 units ).
A shortage is a situation in which the quantity demanded is greater than the quantity supplied AT A GIVEN PRICE. The median selling price of trit is 3.25isk, while the median buying price is 2.60isk. Is the reason there isn't a shortage of trit because producers are unwilling to lower their prices to match the consumers' demand? I don't see why the price doesn't fall, who is accepting the 3.25isk price to let producers keep it at that price? Perhaps I'm missing something, but I suppose that's why I posted this here.


well i cant speak for trit but I've found most buy orders for products that can be manufactured to be ridiculously low. like net loss if sold to those orders low.

For T1 items it's simple: they are still dropped by rats. What you're seeing is the "sweep up in order to reprocess" buy prices. You can set up sell orders at a profitable price and they will sell in these cases. Just not a lot. For a lot of T1 End use items (like modules) the "buy" orders are realy "sweeper" orders, useful for people who just want to get rid of stuff they don't use or newbies. So since the buy component does not represent a true wholesaler trying to consolidate small manufacturers, it's a little deceptive. Minerals on the other hand have both buyers and sellers and "real" buy orders.

Tehg Rhind
Posted - 2011.04.06 22:55:00 - [11]
 

Edited by: Tehg Rhind on 07/04/2011 02:45:30
Supply and demand is a simple concept. Value is designated where supply meets demand.

Take this thread for instance. There is no demand for the horrible OP you supplied. Therefore, supply has outpaced demand and you have created something of no value.

Also your (OP) understanding of the mineral market is a teensy bit oversimplified. Just a bit.

Hieronimus Rex
Minmatar
Infinitus Sapientia
Hav0k.
Posted - 2011.04.07 02:34:00 - [12]
 

Edited by: Hieronimus Rex on 07/04/2011 02:35:11
Originally by: Azhpol
Oh, the target people to get to read this(not post, but read) are people like our current wave of miners who believe allowing them to mine more will make mining more profitable, not understanding how flooding the market will hurt them.


I'd start by pointing out that the impact on total revenue from a supply shift depends on demand elasticity, so if you just know that supply shifted the effect on revenue is ambiguous.

EDIT:
Originally by: Tehg Rhind
Take this thread for instance. There is no demand for the horrible OP you supplied. Therefore, supply has outpaced demand and you have created something of no value.

LaughingLaughingLaughingLaughing

Satchils
Posted - 2011.04.07 04:08:00 - [13]
 

Lol CCP should regulate the ore market, wherein they pay the miners NOT to mine in order to prevent the price of ore from falling too low

clixor
Celluloid Gurus
Posted - 2011.04.07 08:12:00 - [14]
 

Originally by: Tehg Rhind
Edited by: Tehg Rhind on 07/04/2011 02:45:30
Supply and demand is a simple concept. Value is designated where supply meets demand.

Take this thread for instance. There is no demand for the horrible OP you supplied. Therefore, supply has outpaced demand and you have created something of no value.

Also your (OP) understanding of the mineral market is a teensy bit oversimplified. Just a bit.


i lolled :)

What we're forgetting is that demand can't be calculated by just looking at buy orders. ACTUAL demand is how much is consumed in production and minor other sinks. Actually i intended to calculate the max trit supply this week, can someone confirm that with max skills you get 3m trit/h?

Wyke Mossari
Gallente
Posted - 2011.04.07 11:39:00 - [15]
 

Originally by: Satchils
Hmm I have a question.

If we take a look at Tritanium:
Eve Central - Tritanium

We see that the quantity supplied ( 83,873,196,457 units ) is much less than the quantity demanded ( 324,153,639,421 units ).
A shortage is a situation in which the quantity demanded is greater than the quantity supplied AT A GIVEN PRICE. The median selling price of trit is 3.25isk, while the median buying price is 2.60isk. Is the reason there isn't a shortage of trit because producers are unwilling to lower their prices to match the consumers' demand? I don't see why the price doesn't fall, who is accepting the 3.25isk price to let producers keep it at that price? Perhaps I'm missing something, but I suppose that's why I posted this here.


There will always be a spread in an exchange style market.

The total buy order size is inflated by the financial leverage of the margin trading skill.

There are multiple traders competing in the middle, buys will likely exceed sells orders.

Another way to look at it would be to consider the buy order prices as the wholesale price paid by the middle men and the sell price as retail price.


 

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