What will happen if the demand is high and the supply is also high?
In: 3
quantity sold will increase, price will remain roughly same.
Price up or down will depend on exact size of supply and demand shifts, and their slopes.
Really depend on the situation. But generally (elastic goods), then the price is high, but a bunch of it is being produced.
Either the demand goes down or the price drops because there is too much product. In most cases it’s both.
This would be fairly ideal economic growth. If there is growth in both demand and supply (roughly equal), this results in more economic activity and output at relatively stable prices.
I’m not convinced that phrasing even makes much sense. You can certainly have an absolute high demand, as in the product in question is just sold in very high amounts. However, typically these words are used relatively, I’d wager. As such, if both are high, nothing happens, as they’re now no longer high _relative_ to each other. In other words, whether I produce 50 of X and have a demand of 50 of X or have both those values at 500 changes next to nothing, the demand is still perfectly met by supply either way. Of course, the actual real world isn’t that simple, but the point is that there doesn’t seem to be much meaning to this phrasing.
they will simply control the amount of product they release to introduce artificial scarcity to keep profits high. look at the diamond industry. they are exceedingly common. they are merely highly controlled to fix an artificial value.
You’ve essentially just asked “what happens when supply meets demand” which the answer is steady-state pricing at a fair market value the seller and customers agree to.
So, when you think of supply and demand, it’s important to think of it in terms of *changes*. You’re saying supply and demand are “high”, but what is that compared to? The supply and demand for a different good? The supply and demand for the same good a year ago? The supply and demand for a substitute good?
For the purpose of your question, I’ll assume you’re asking what happens if supply and demand both *increase*. What does that mean?
When demand increases, that means that *people are willing to buy more of an item at a given price*. If a coffee shop sells 1,000 coffees a day for a price of $1.00 per coffee, an increase in demand would mean that they would start selling *more* than 1,000 coffees per day at a price of $1.00.
When supply increases, it means that *producers are willing to sell more of an item at a given price*. Imagine a toy company that makes 1,000 dolls each year and sells them for $40 each. An increase in supply would involve the producer making *more* than 1,000 per year and selling them for $40 each (alternatively, this could look like a producer selling the same amount of toys for a lower price).
If both supply and demand increase, the result is dependent on how much each increases. If demand and supply increase by the same amount, then you end up with a new equilibrium of consumers (producers) buying (selling) more of an item at the same price. If demand increases more than supply, then prices will increase along with quantity. If supply increases more than demand, then prices will decrease while quantity increases.
So supply and demand are the sides of the graph where:
Supply is a downward line (more supply alone would decrease price to sell)
Demand is the upward line (more demand alone would increase price to sell)
So they are offset in a way
Supply 10 price $2
With more supply and more demand all you know for sure is that Supply increases, not whether price goes up or down.
Supply 100 price could be anywhere around 1.90 to 2.10 since demand is still increasing those people will still pay a similar price.
The market doesn’t care if supply/demand is high or low. It only cares if supply is higher or lower than the demand.
Latest Answers