"Dave" wrote in message
...
On Fri, 5 May 2006 14:03:22 -0400, "Vito" said:

What was
amazing was how a minor (1 or 2%) change in the supply/demand ratio increased
or
decreased prices and thus profits. Maybe some of the business majors here
can
provide the actual equation and typical figures.

It depends entirely on the slope of the two curves. The technical term is
"elasticity" of each of the two. That is, the amount by which a specific
increase in price makes producers willing to increase output, and the amount
by which it causes purchasers to reduce the quantity they're willing to buy
at that price.

Thanks. The equation included those factors and prof claimed that this
'elasticity" was very predictble for well established markets like automobiles,
oil, et cetera. He also mentioned a "poloroid" (?) scheme of sales. Say that a
small % of people would pay $100 for something, but a lot would buy it for $50
and it only costs $1 to produce. The smart way is to offer it at $100 until
sales begin to drop indicating a saturated $100 market then drop the price to
$75. That way you get $100 for some items and many people, who otherwise would
only pay $50, will snap up the "bargains". Interesting stuff I just never got
into.