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Well if I take a look at the GPU market the prices have nearly doubled over the past 6 months and there still isn’t any supply. In other words, the price hiked

Well if I take a look at the GPU market the prices have nearly doubled over the past 6 months and there still isn’t any supply. In other words, the price hiked to a point where people will otherwise say “I’ll just wait longer”, and this is what’s happening.

cortesoft 6y ago
That is always what happens when prices go up. The whole point is to reduce the number of buyers who want the product at that price so that there is enough supply to fill the remaining demand. That is how a supply and demand curve works.
- mort96 6y ago
  But you still have a shortage, right? People still want microchips. In ideal conditions, the price will stabilize at the level where every chip gets sold, but nobody who wants to pay that price has to wait in line for too long. But if you reach that point, you still have a whole lot of buyers who still want a microchip, but who are unable to pay for them at those elevated prices - i.e a shortage. With fuel, you can reduce your car usage for a while and when prices get back down you can just go back to your old level of fuel consumption. But with microchips, a reduction in "consumption" results in pent-up demand; people who have been waiting a while to buy a new GPU still want to buy that GPU when the prices go down.
  - cortesoft 6y ago
    The idea is that if you need it bad enough, you can find one at the higher price. If prices didn’t go up, you wouldn’t be able to find one at any price. Some of the people who would want a chip at $x don’t want it at $x*2, and will just never buy one unless the price drops. If the price never drops because supply is never increased, then they will simply never purchase it.
    - mort96 6y ago
      To me that just sounds like an indefinite microchip shortage.
      - cortesoft 6y ago
        Well, a lot of people would buy yachts if they were only $1000.... since the price will never get there, they will never get their yacht that they want. Does that mean there is a yacht shortage? If chip costs stay high, that just means that is how expensive chips are.
        mort96 6y ago
        So what's your definition of a shortage then? We're in a situation where a lot of people who want microchips aren't able to buy them because the suppliers aren't able to produce enough of them. What is the difference between that and a shortage? If we don't produce enough food for everyone to eat, we would be in a similar situation: the price would rise until only the people with the most money could afford food. We would call that a food shortage. Replace food with microchips and that's still a shortage, right? (Albeit a less dire one.) Or do you follow an ideology where there is no such thing as a shortage, there is only the almighty supply and demand curve? EDIT: To respond to the yacht thing: It's my understanding that the price of yacths aren't elevated because we're unable to produce enough of them. It is my understanding that yachts are expensive A) because producing them genuinely requires a lot of resources and B) because they're luxury goods which are priced according to their target market. If loads and loads of people suddenly started demanding yachts at their current price, and yacht factories weren't able to keep up with the demand, and the price of a yacht went up significantly due to supply constraints, I would certainly call that a "yacht shortage".
        cortesoft 6y ago
        You can see the definition of a shortage here: https://en.wikipedia.org/wiki/Shortage https://en.wikipedia.org/wiki/Shortage The tl;dr is that a shortage is when there are people who are willing to pay more than the market price for an item but something is preventing the market from raising prices.. either because of laws against price gouging, price caps, or because manufacturers have some other incentive not to raise prices.
- stingraycharles 6y ago
  What I meant to say is that, even with these inflated prices, everything is sold out: even if I want to pay $2500 for that 3090 GPU, I cannot get it.
  - cortesoft 6y ago
    You can get them for around $3000 on auction sites.

cortesoft 6y ago

That is always what happens when prices go up. The whole point is to reduce the number of buyers who want the product at that price so that there is enough supply to fill the remaining demand. That is how a supply and demand curve works.

mort96 6y ago
But you still have a shortage, right? People still want microchips. In ideal conditions, the price will stabilize at the level where every chip gets sold, but nobody who wants to pay that price has to wait in line for too long. But if you reach that point, you still have a whole lot of buyers who still want a microchip, but who are unable to pay for them at those elevated prices - i.e a shortage. With fuel, you can reduce your car usage for a while and when prices get back down you can just go back to your old level of fuel consumption. But with microchips, a reduction in "consumption" results in pent-up demand; people who have been waiting a while to buy a new GPU still want to buy that GPU when the prices go down.
- cortesoft 6y ago
  The idea is that if you need it bad enough, you can find one at the higher price. If prices didn’t go up, you wouldn’t be able to find one at any price. Some of the people who would want a chip at $x don’t want it at $x*2, and will just never buy one unless the price drops. If the price never drops because supply is never increased, then they will simply never purchase it.
  - mort96 6y ago
    To me that just sounds like an indefinite microchip shortage.
    - cortesoft 6y ago
      Well, a lot of people would buy yachts if they were only $1000.... since the price will never get there, they will never get their yacht that they want. Does that mean there is a yacht shortage? If chip costs stay high, that just means that is how expensive chips are.
      - mort96 6y ago
        So what's your definition of a shortage then? We're in a situation where a lot of people who want microchips aren't able to buy them because the suppliers aren't able to produce enough of them. What is the difference between that and a shortage? If we don't produce enough food for everyone to eat, we would be in a similar situation: the price would rise until only the people with the most money could afford food. We would call that a food shortage. Replace food with microchips and that's still a shortage, right? (Albeit a less dire one.) Or do you follow an ideology where there is no such thing as a shortage, there is only the almighty supply and demand curve? EDIT: To respond to the yacht thing: It's my understanding that the price of yacths aren't elevated because we're unable to produce enough of them. It is my understanding that yachts are expensive A) because producing them genuinely requires a lot of resources and B) because they're luxury goods which are priced according to their target market. If loads and loads of people suddenly started demanding yachts at their current price, and yacht factories weren't able to keep up with the demand, and the price of a yacht went up significantly due to supply constraints, I would certainly call that a "yacht shortage".
        cortesoft 6y ago
        You can see the definition of a shortage here: https://en.wikipedia.org/wiki/Shortage https://en.wikipedia.org/wiki/Shortage The tl;dr is that a shortage is when there are people who are willing to pay more than the market price for an item but something is preventing the market from raising prices.. either because of laws against price gouging, price caps, or because manufacturers have some other incentive not to raise prices.
stingraycharles 6y ago
What I meant to say is that, even with these inflated prices, everything is sold out: even if I want to pay $2500 for that 3090 GPU, I cannot get it.
- cortesoft 6y ago
  You can get them for around $3000 on auction sites.