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By the same logic, changing demand presupposes an inefficient market. Changing demand in the absence of higher supply will only result in demand not being met.
by jules 9y ago
By the same logic, changing demand presupposes an inefficient market. Changing demand in the absence of higher supply will only result in demand not being met.
- petilon 9y agoGoing back to the fast food example, if there is higher demand the restaurateur can get bank loans to hire more employees and produce more Big Macs. Entrepreneurs are always looking for demand and then fulfilling that demand in order to generate profit and wealth. The reverse is not true. Consumers aren't going to be interested in your mud-pies just because you increased the supply of mud-pies.
- jules 9y agoIf there is higher supply of a good then the price goes down and the amount of the good sold goes up. This is entirely symmetric to higher demand leading to higher prices which results in more supply. People will not buy mud pies unless the price is so outrageously low that they can use the mud for their garden. The opposite equivalent of a mud pie is a product that nobody will produce except at an outrageously high price.
- imtringued 9y agoMore supply means lower prices and with the saved money you can buy something else.