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10-23-2009   #21 (permalink)
WhatThePhuc
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"This creates a higher DEMAND in random box keys. If demand increases, the supply will decrease due to too many people buying keys at 25g."

i made some graphs
correct me if i'm wrong

MR = Marginal Revenue (Price)
Q = Quantity
MC = Marginal Cost
S = Supply
D = Demand
ATC = Average Total Cost

The Market for Random Keys in Long-Run Equilibrium:


Demand Increases due to a New Character Released
Yellow Rectangle = Total Profit


what's interesting at this point is that you said this:
"The basic rule for equilibrium price/quantity is that: if the price or quantity changes, and does not meet the equilibrium requirements, they will naturally change to meet equilibrium."
yet you say that supply DECREASES
as you can see from the last graph, price (MR) increased
giving incentive for new sellers to enter the market

which brings the price back down to the long-run equilibrium price

if i am actually wrong about this, i would like to know
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Last edited by WhatThePhuc; 10-23-2009 at 05:34 PM.