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Thread: $69.00 Oil

  1. #151
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    Quote Originally Posted by Daffy View Post
    Well, the way I was taught (and, yes, I did have econ classes in college) competition was crucial for supply and demand to work. If you say that is no longer being taught, I have no argument.
    The curves are not exactly the same in a monopoly versus full competition, but the price is still set by supply and demand. If it weren't, a monopoly would simply charge infinity and quit tomorrow to enjoy the wealth.

  2. #152
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    Quote Originally Posted by tdvance View Post
    The curves are not exactly the same in a monopoly versus full competition, but the price is still set by supply and demand. If it weren't, a monopoly would simply charge infinity and quit tomorrow to enjoy the wealth.
    Isn't that what they just did until the world economy started to break down (I am not suggesting that was the only cause...far from it)?

  3. #153
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    Quote Originally Posted by Spock Jenkins View Post
    What you posted said that

    This is true. It doesn't mean they don't apply in other markets. It just means they are easiest to explain and understand in a competative market. In other markets where the supply is tightly controlled or inelastic - things can get a bit confusing - but it's still supply and demand.

    It's been a while, but I think I got an 'A'. The demonstration that most stuck with me was the M & M's explanation for diminishing marginal utility. Eat a 1 lb. bag of M & M's and the concept will never be forgotten.
    Maybe we're not as far apart on this as we both seem to think.

    I got a "C." How's that for honesty?

  4. #154
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    Quote Originally Posted by Daffy View Post
    I love it when people put words in my mouth that I have never said. Read through the entire thread for my reply...this kind of foolishness is way too boring to have to deal with yet again.

    Cute smilie...applies more to you than me, though.
    I could respond to this, but quite frankly you are not worth the candle.

  5. #155
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    Quote Originally Posted by TheHalcyonYear View Post
    I could respond to this, but quite frankly you are not worth the candle.
    Very nice...if I ever decide to let someone else tell me what I actually think, I'll be sure and let you know.

    Have a day.

  6. #156
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    Quote Originally Posted by Daffy View Post
    Maybe we're not as far apart on this as we both seem to think.

    I got a "C." How's that for honesty?
    That's pretty honest. Much depends on the professor. The M & M demonstration I remember quite vividly almost 18 years later. The prof had a way of making things quite simple. I was fortunate.

    I think the disconnect is that you are viewing "Supply and Demand" as a cause. Supply and demand is more of a measurement of causes and effects. The supply side measures factors impacting the supply - whether they be controllable or not. The demand side measures factors impacting the demand - whether they be controllable or not.

    The curves are derived by estimating the impact of those factors. What would happen to the demand for oil if electric cars could travel 400 miles on a single charge and be recharged by simply exchanging battery cells at a station? It would drop. Supply would remain largely the same - so the price would drop. If the price fell far enough, people would stop producing and looking for new sources of oil - so the supply curve would move. Demand would remain the same (assuming no further changes) and the price would either remain steady or increase depending on how much supply was cut.

    In today's market - even with a lack of substitutes - supply and demand is at work. If the OPEC nations decide to cut production - the supply curve moves the the left and the price increases, demand being the same. If a non-OPEC nation discovered immense reserves and chose to get into the game - the supply curve would move to the right and the price would drop. In the oil market, where futures trade actively - people speculating as to what might happen to the supply of oil in the future can impact the price of oil today.

  7. #157
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    Crude oil is down to $48.88 a barrel today.

  8. #158
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    Quote Originally Posted by Spock Jenkins View Post
    That's pretty honest. Much depends on the professor. The M & M demonstration I remember quite vividly almost 18 years later. The prof had a way of making things quite simple. I was fortunate.

    I think the disconnect is that you are viewing "Supply and Demand" as a cause. Supply and demand is more of a measurement of causes and effects. The supply side measures factors impacting the supply - whether they be controllable or not. The demand side measures factors impacting the demand - whether they be controllable or not.

    The curves are derived by estimating the impact of those factors. What would happen to the demand for oil if electric cars could travel 400 miles on a single charge and be recharged by simply exchanging battery cells at a station? It would drop. Supply would remain largely the same - so the price would drop. If the price fell far enough, people would stop producing and looking for new sources of oil - so the supply curve would move. Demand would remain the same (assuming no further changes) and the price would either remain steady or increase depending on how much supply was cut.

    In today's market - even with a lack of substitutes - supply and demand is at work. If the OPEC nations decide to cut production - the supply curve moves the the left and the price increases, demand being the same. If a non-OPEC nation discovered immense reserves and chose to get into the game - the supply curve would move to the right and the price would drop. In the oil market, where futures trade actively - people speculating as to what might happen to the supply of oil in the future can impact the price of oil today.
    I don't really disagree with anything you said...except that to be supply and demand as I was taught it (which, you are right, was as a cause), the model must include competition; and in the current situation, there really is none...or very little, anyway. The rest I understand and agree with.

  9. #159
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    The main thing I took away from the supply and demand curves is that each were estimated in and of themselves. That is, the supply curve is not demand dependant, and vice-versa. The problem with this approach is that when one changes, it often changes the shape of the other curve.

    A friend of mine was heavily into econometrics a few years back, and aside from making a killing, he really was able to beat the "expert's" predictions as to how markets would react given changing environments (socioeconomic, political, financial, etc.). He was an engineer, so the math didn't scare him nearly as much as it does many folks with a business background.

    The multidimentional morphology was rather intense, far beyond the simple supply/demand curves.

  10. #160
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    Quote Originally Posted by Daffy View Post
    I don't really disagree with anything you said...except that to be supply and demand as I was taught it (which, you are right, was as a cause), the model must include competition; and in the current situation, there really is none...or very little, anyway. The rest I understand and agree with.
    Think of it this way (and it might be a terrible analogy) - Supply and Demand are like a speedometer. The speedometer does not cause you to speed up or slow down. It just provides you with information.

  11. #161
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    well, changes in prices do alter supply and demand, and supply and demand cause changes in prices (and stubborn companies that don't set the price right lose out as a result). It is a feedback system.

    Actually, the speedometer is too--if you look down and the speedometer says 80 and you see a cop ahead, your speed magically goes down.

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