Results 1 to 6 of 6

Thread: Supply and demand

  1. #1
    Bronze Member
    Join Date
    Jan 2009
    Location
    earth, mostly
    Posts
    133
    Thanks
    20
    Thanked 14 Times in 12 Posts

    Talking Supply and demand

    Before studying about the demand and supply curves, I always used to wonder if more farmers made the price go up or down. Or was it more people that eat the wheat that made the price rise or fall. Well After a few years at university and you soon realise that this is the principle of Supply/Demand.

    For those who don;t know or didn't have the opportunity to go to tertiary education here's my understanding.

    Eskom's power outages early in 2008 caused 'power savers' (UPS's and Generators) to become a necessity to continue business. This would mean that the demand would increase, or more buyers in the market.

    Now on the suppliers side, as they sell more they want to make more profit by upping the price. As demand increases, suppliers increase their prices to make more money on the same amount of stock.

    Now kids here's a picture


    So, the equilibrium between the price suppliers are willing to sell at and the price buyers are willing to buy is the market price. (Qe) This stands to reason, if you can't sell something you drop your price (Current property market situation for example). If you want to buy something, you'll look for the lowest price (obviously if we are ignoring quality). Since the demand has dropped for generators the price you'd pay for a generator today is cheaper than it was 8 - 12 months ago. In fact now would be the best time to buy anything like UPS's or generators, but its human tendency to think "out of sight out of mind", "No power failure, i don't need a UPS...".

    To prove my point here is a great offer on a new generator: http://www.powerbackups.co.za/produc...d/79?osCsid=25 Its priced to go at R3999, but 6 months ago they costed well over R6000! (By the way, I used to deal with this company and they have great service, and are running out of stock fast with this genny )
    once there was a man. the end.

  2. #2
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    22,648
    Thanks
    3,304
    Thanked 2,676 Times in 2,257 Posts
    Blog Entries
    12
    What will be aggrevating the supply/demand equilibrium is the capital tied up in stock. I'm sure a number of speculators got caught with lots of stock on their hands. They were probably hoping for a load-shedding repeat bonanza this summer during maintenance season, but that hasn't emerged.

    So now they know they've got dead stock and 0 growth happening on their capital.

    Pretty tempting offer BTW.

  3. #3
    Bronze Member
    Join Date
    Jan 2009
    Location
    earth, mostly
    Posts
    133
    Thanks
    20
    Thanked 14 Times in 12 Posts
    That is true. Maintenance was planned, but with the coal station up and running i think they are managing with the power load. It is a wonder how many websites popped up selling UPS equipment in no-time, and today are no-where to been seen.

    Powerbackups as i recall was around long before that and that why I trusted them. The problem with fly by night operators is the guarantee is null-and-void if they go bang.

    I wonder if winter will be harsh enough to pull out the heaters this season (Country wide).
    once there was a man. the end.

  4. #4
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    22,648
    Thanks
    3,304
    Thanked 2,676 Times in 2,257 Posts
    Blog Entries
    12
    Do those curves have formulas?

    BTW - I was just taking a closer look at that generator. I've got one exactly like it, except it's branded as a Firman and the paintwork is bright yellow! It's been a reliable machine so far.

  5. #5
    Gold Member Martinco's Avatar
    Join Date
    Oct 2008
    Location
    Rustenburg
    Posts
    927
    Thanks
    175
    Thanked 136 Times in 108 Posts
    I saw an ad from Builders W/H over the weekend for the same unit for R 2999.00. ( Rolux)
    This certainly proves the point of "Supply and demand"

    The question is: How much profit did these guy's make when they sold it for R5999.00 ?
    Martin Coetzee
    Supplier of Stainless Steel Band and Buckle and various fastening systems. Steel, Plastic, Galvanized, PET and Poly woven.
    We solve your fastening problems.
    www.straptite.com

    You may never know what results will come from your actions, but if you do nothing, there will be no results... Rudy Malan 05/03/2011

  6. #6
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    22,648
    Thanks
    3,304
    Thanked 2,676 Times in 2,257 Posts
    Blog Entries
    12
    With dead stock, it pays in the medium term to dump it, even at a small loss, if you've got something else to put the capital into that will produce a return.

Similar Threads

  1. A Erwin on compact fluorescent lamps rollout programme
    By I Robot in forum Electrical Load Shedding Forum
    Replies: 4
    Last Post: 05-Sep-08, 06:13 PM
  2. And the lights go out again.
    By Dave A in forum Electrical Load Shedding Forum
    Replies: 71
    Last Post: 25-Feb-08, 04:38 PM
  3. What the goverment plans to do
    By duncan drennan in forum Electrical Load Shedding Forum
    Replies: 31
    Last Post: 18-Feb-08, 01:18 PM
  4. Why would you save energy?
    By duncan drennan in forum General Business Forum
    Replies: 8
    Last Post: 14-Jul-07, 09:17 AM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •