/lit/ - Literature

[Anonymous No.12275136]

Does supply and demand really exist or is it just a convenient false explanation for business owners to parade around when they raise prices?

Here’s the basis:
Less of a commodity = higer price
More of a commodity = lower price

Now, I could see the reasoning in charging more money for a product as it increases in rarity. However, when examining the inverse it all falls apart. If the primary purpose of business is to make money for its shareholders then lowering the price in a surplus is almost asinine. It’s not like the general public will know when an oil company has struck an extraordinarily large oil pocket, so why lower the cost? Wouldn’t it be more smart to store the oil and continue to sell it at large prices? And if you run out of storage then why not rent more until you run out of the surplus oil? The cost of the oil would offset the storage rental and bring in a larger profit if you just kept the original price.
I think that supply and demand could largely be a product of deception

[Anonymous No.12275185]

>>12275136
> However, when examining the inverse it all falls apart. If the primary purpose of business is to make money for its shareholders then lowering the price in a surplus is almost asinine. It’s not like the general public will know when an oil company has struck an extraordinarily large oil pocket, so why lower the cost? Wouldn’t it be more smart to store the oil and continue to sell it at large prices?

Ever heard of the word "competition"? This is why cartels are illegal.

[Anonymous No.12275250]

You should really read an econ textbook or any academic material about economics. Supply and demand are much more complicated than
>Less of a commodity = higher price
>More of a commodity = lower price
I don't think I'm capable of explaining it really, but there's much more to understand before you can properly begin suggesting that the model is not accurate.

[Anonymous No.12275274]

"wouldn't it be more smart"

[Anonymous No.12275300]

>>12275136
If only one company has an increased supply them that would be true (and is, see e.g. De Beers); but if all companies have an increased supply then their compatriots can undercut them abit and make more money from the customers flicking to them.

It's really much more complicated but I think that's the basic idea

[Anonymous No.12275311]

>>12275136
No supply and demand don’t exist anymore than “intention” or “largesse” or “opulence” exists. They’re just quantifiers that people use as a heuristic to make cheap, usually incorrect, but difficult to check, predictions. All that matters is farming money off of the public by any means necessary. You can be a successful businessmen and have multiple bankruptcies, be taken to court for fraud, fire most of your employees and make products that kill people routinely. Its a form of legal piracy.