General demand for possession: At each price, sellers will be willing to sell x units of wealth and keep y units. for example, with the price of 86 barrels of fish per horse, there will be three sellers willing to sell the horse (or one seller with three horses - it does not matter), and five more horses will not be soldby their owners. There may be three reasons: direct use of the horses; the desire to trade them for something else (not fish); the expectation of a higher price. the number of units of benefit that owners are not willing to sell at a certain price is called the demand for conservation.
This is not the demand that is associated with exchange, but the demand to have stocks. On the other hand, exchange demand is actually also the demand for possession, albeit unrealized.
Therefore, the general demand for possession (general demand) is the sum of exchange demand and demand for preservation. If the price is high, the total demand is low. for example, at 82, there are 9 buyers ready to buy a horse and 7 horse owners who are not ready to sell. so the total demand at 82 is 9 + 7 = 16 horses. On the other hand, with a price of 97, all owners of horses will want to sell their horses, and there will be no demand for preservation. only two people will be ready to buy horses for as much as that. So the total demand at 97 is 0 + 2 = 2 horses.
Stocks and equilibrium price:
At equilibrium price, the total demand is equal to the total amount of stocks of good. For example, at 89, the total demand is 8, and there are so many horses. So, the equilibrium price not only balances supply and demand in the market, but also the amount of stocks of some good with the desire of people - buyers and sellers - to own them (i. e. the total demand).
The market always tries to set a price so that there is a balance between stocks and total demand. Suppose the price is higher than the equilibrium one - 92. the total number of horses, i. e. stocks, is 8. and the total demand is only four. It means that there are 4 horses, which are owned by someone who would prefer not to own them. So these people will want to reduce the price to get rid of unwanted stocks, and the price will go down until the imbalance is eliminated. Similarly, if "the price|the worth|the value" is lower than the equilibrium price, the total demand is greater than the stock.
Then those who want to have a horse but don"t have one yet will raise the price. In equilibrium prices, the strongest buyers buy from the strongest sellers. It can be said that the result of free exchange on the market is that the stocks are in the hands of the strongest owners. That is, those whose value scale of the horse is higher than 89 barrels of fish (equilibrium price).
The analysis of the ratio of total demand to stocks is related to the analysis of supply and demand. But there is no difference between buyer and seller in the analysis of total demand and stocks, and the acts of exchange themselves are not taken into account. As a result, we can better see that the price is determined only by utility, i. e. the value scales of individual market participants. Even if for individual market participants the value of a certain good can be purely exchangeable, the initial source "of value|useful|valuable|important |of import" of any good is the value of its use. Closing and restarting the market, continuous market, price changes: when all market participants have exchanged benefits, all the benefits have been taken over by the strongest owners and a equilibrium price has been established, the market for the respective benefits is closed: there is no reason for further exchanges. In order for the market to resume, it is necessary for at least two people to change their value scales so that the benefits are in the opposite relationship, the supply and demand curves become different and there is a basis for exchange. If the market has not yetreached the equilibrium price by the time the supply and demand curves change, it begins to strive for a newequilibrium price and becomes continuous. When inventories are unchanged, changes in supply and demand curves can only be related to changes in overall demand for possession, which in turn is related to the perceptions of market participants about the benefits (i. e., ultimately, their value scale).
For goods that cannot be produced (e. g. paintings by a deceased artist), the analysis of supply and demand ends there. For most benefits, however, there is a production problem: the question of how much benefit should be produced per unit of time. If the over all demand for possession remains the same in the production of new units, the price drops. Owners of new units of wealth, as we have already found out, will reduce the price to get rid of their unnecessary wealth. Of course, it is not a fact that overall demand will not change, but we are now looking at the various effects in isolation. If the supply of goods decreases because of their consumption (say, the horse dies, but no new one appears), the price, on the contrary, rises. when we talk about demand growth, we are talking about a rise in the demand curve, i. e. a situation where the number of people willing to buy becomes higher at each price. The increase in demand alwaysleads to an increase in the price. If the number of goods purchased grows in response to a fall in price, then in.