Supply and demand
Also called: law of supply and demand, law of demand
Supply and demand is the model that explains prices: when more people want something than is available, its price rises; when more is available than people want, its price falls.
The demand curve slopes down (people buy more when it's cheaper) and the supply curve slopes up (producers make more when it pays more). Where they cross is the equilibrium price and quantity.
A shift in either curve, like a new trend raising demand or a drought cutting supply, moves the equilibrium.
In Journey Shares
Every Journey Shares price is set by supply and demand through a bonding curve: buying raises the price and selling lowers it. →
Related terms
- Market equilibrium: Market equilibrium is the price at which the quantity buyers want equals the quantity sellers offer, so there's no shortage or surplus.
- Price elasticity of demand: Price elasticity of demand measures how much the quantity people buy changes when the price changes.
- Bonding curve: A bonding curve is a formula that sets an asset's price from how many units are in circulation, so each purchase raises the price and each sale lowers it.
- Price ceiling: A price ceiling is a legal maximum price, like rent control; a price floor is a legal minimum, like a minimum wage.
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