Explain supply and demand to me. I understand it at face value intuitively but then again I kind of don't...

Explain supply and demand to me. I understand it at face value intuitively but then again I kind of don't. Why does an increase in supply necessarily lead to a decrease in prices? If I have a secret warehouse stockpile of toilet paper no one knows about why can't I just set the price at $100? Of course I can drop the price to sell more of it but that's different, isn't it?

Because if you have more supply than demand you have products sitting around in storage gathering dust and rotting, so you lower the price to increase demand.

Toilet paper rots? Tell me more.

Unsold products are a waste of the resources you spent to make/obtain/store them, you fucking tard. Even if it could theoretically last forever you don't WANT it to sit in storage forever. Storage space also costs MONEY.

Imagine there was only one girl in your school, so evidently all boys would have to court her if they wanted to have a gf, because she is the only option. She has a deep pool of choices so she can raise the bar really high, even if she's not that attractive. We can say that her market value is high.

Now imagine another girl moves to the school. The two still have extremely high amount of choices, but they diminish a tiny bit. If one of them picks a boy to be her bf, that one is already taken and the amount of choices are now down by one.

Now imagine the ratio between the girls and the boys is 1:1. That initial girl, if she was not at all attractive, has considerably less choices of dates. She doesn't get Chad Thundercock anymore, because Stacy already has him. Her market value decreased significantly.

Now imagine the ratio of girls to boys is 2:1. Our once highly valued commodity doesn't even get a second look from Chad, and has to settle for the bottom of the barrel.

And and so on and so forth. It's like that with all commodities.

Storage space will ALWAYS cost money. What's the difference if one stockpile of toilet paper is replaced with another?

>Why does an increase in supply necessarily lead to a decrease in prices?
It doesn't, not necessarily. A greater supply means you need additional incentives for your customers to buy your share of the supply compared to another guys share of the supply, and lowering prices is the easiest way to achieve this. Additionally the more common a product is, the less you needed to spend in resources, relatively, to obtain it, meaning you can sell it cheaper and still make profit.

>f I have a secret warehouse stockpile of toilet paper no one knows about why can't I just set the price at $100?
You can and in fact people do it all the time, Diamonds, are a common example of this. Diamonds are actually not very rare at all, but their supply on the market is artificially lowered by the people in control of their mining to keep the value high. Similar with lots of other things, oil, too. Stockpiling something to artifically lower its supply on the market is a common strategy, and only not universal because of competition and internatioinal trade laws.

>If I have a secret warehouse stockpile of toilet paper no one knows about why can't I just set the price at $100
Because you will go out of business and go bankrupt while Bob sells his toilet papers at a cheaper price.

Now about the secret toilet paper stash. I think the analogy would be, what if I go to a bar to look for a date and all the women in town were to secretly remain in their homes? Can you say that there is a high supply of women in town because these women exist, only they are hidden in their homes? No because they would be out of the market place for that night.

Supply in the sense of supply and demand isn't the existence of a good or service, but its availability on the market. If all women stay home, supply is low, because they aren't "on the market".

Uh, yes that's exactly what I said.

Sorry, I misunderstood you because of rushed reading, my bad.

jevontai is willing to pay $70 per gram
jamal: $80
demarcus: $90
tyrone: $100

each wants 1 gram

if you have 1 gram you can sell it for $100
2: $90+$90=$180
3: $80*3=$240
4: $70*4=$280

The same trend applies in the wider economy, except you use statistics to gauge the quantity the market is willing to buy at particular prices as opposed to the simple discrete mathematics used here.

Now consider the cost involved, if you can get a gram for $60, is it worth spending all day finding buyers just to make $60/$40? What if there is a better way to distribute your product? Why does Tyrone pay $100? Various intangible factors like this influence the price people are willing to pay and they are influenced by the law of supply and demand also, you have limited time and you have to invest it wisely. By getting to know everything about a business you can improve efficiency.

If I have a global monopoly on toilet paper and have endless warehouses stocked of it and proudly display it in stores world wide and refuse to drop the price below $100 what happens then?

You'll get sued. This is why anti-monopoly laws exist.

You get severely undercut by newspaper

So supply doesn't really matter or exist, simply "apparent supply"?

competition is bound to arise, at most you'll have people trying to ally themselves to you to turn it into an olygopoly.

or someone kills you and shits on your body.

Given that toilet paper is easy to manufacture and you presumably don't control every government in the world tightly enough to shut down new competitors, people start up toilet paper factories to undercut your monopoly.

Bob will find a way to substitute toilet paper with different materials and sell at a cheaper price.

Someone else will produce toilet paper for cheaper or develop a alternative to it.
For a real world case, see the global oil crisis when the OPEC tried this shit with oil to pressure the West and the west just started innovating oil-product alternatives leading to them suffering severe economical damage they still haven't recovred from and why they haven't tried this shit ever since.

Its caled supply instead of storage. What matters is the amount of this good that people can actually get or think they can get, but thats more complicated and part of why inflation exists.

If its on the market, its offered up for purchase. If its not on the market its irrelevant as far supply is concerened.

Yes, prices are arbitrary values agreed between parties and it is limited, among other things, to what knowledge they have (like everything else).

This too. There's an infinite supply of minerals in the universe, but minerals in asteroids and other planets are not taken into consideration when making economic calculations because they are not available on the market right now.

It doesn't have to be apparent.

Obviously getting a girl to let you into her own home to flirt with her is much, much harder than doing it while she's a the bar. What if her house is too far away too?

remember time and effort are also meassures of value, ordering the same pizza is more expensive than getting it from the same place or cooking it yourself, but who's got time for that shit?

This is an unrealistic situation due to the realities of what toilet paper is, pretty much any paper company can make toilet paper.

Taking the example seriously though, people would just find alternatives. Mullen leaves, more than three stones, a grassy hill, water. Anything you can slide in between your ass cheeks is a potential substitute.

>What's the difference if one stockpile of toilet paper is replaced with another?

How do you mean?

If you produce 2000$ of tp, but the demand is only for 1000$ you have 1000$ of waste in storage. Now, you might think you won't produce any for the next week and sell that. But it isn't that simple, you have things like workers, who won't like being without pay for a week, your suppliers won't like it, they want to sell you raw materials, and most importantly you won't expand at all. The whole thing with lowering prices due to increased production is to get it to sell, once you sell a million tps at a smaller profit you will have much more money than if you sold ten thousand tps at a slightly higher profit. And more money = more expansion, a larger share of the market, more innovation and more ways to make even more money. If you don't bite into your profits for a wider share of the market someone else will, and if your brand and your competitors brands are of the same quality, your brand won't sell because there is a cheaper alternative. Now, you can't JUST lower the prices artificially this is unfair competition, you need to justify the drop in price, and increased production is a great way to lower the prices.

>Anything you can slide in between your ass cheeks is a potential substitute.

Anything? :')