LAWLzoR

It's been a while since I've made an educational blog, huh? Well I thought I'd take a stab at it again since I was inspired recently. I'm going to explain very basic principles of economics by using video games and video game related topics! I supposed you could call it Game Theory but what sort of idiot names an educational series using video games "Game Theory"? ikr. Let's get to it.

So let's use the very concept of buying video games. If you took a poll asking people how much they'd pay for a video game, you'd notice an interesting (but obvious) trend. The higher a game's price is, the less quantity of the game is demanded. Likewise the lower game's price is, the more quantity of the game is demanded. This is known as an "inverse" relationship and applies to anything with this sort of relationship. So if you wanted to graph this with your y-axis labeled "price" and your x-axis labeled "quantity", this line would go from top right to bottom left, showing the inverse relationship.

But what about supply? After all you can't buy a game unless someone is actually making it. Well if you take another poll asking companies where they'd supply the video game you'll notice an interesting (and again obvious) trend. The more the game's price is (how much it's being sold for), the more quantity of that game would be supplied. The less the game's price is, the less quantity of that game would be supplied. This is called a "direct" relationship and just like inverse relationships this relationship applies to any sort of phenomena that behaves in the same way. When you graph this line it'll look almost the opposite of the demand curve (even though it's a straight line, they're both called curves because they aren't always straight lines). The line will start on the bottom left and end on the top right.

So after graphing those two curves you'll notice that it makes an X shape on the graph. Where those two curves meet is very special because that's where equilibrium price and equilibrium quantity is. That's the point where the most number of people agree on buying that quantity at that specific price and supplying that quantity and that specific price. Now this isn't to say everyone will buy the product. Obviously not everyone can afford a $100 product. But at equilibrium price and quantity that's where the most number of people will buy. This is where suppliers and buyers usually want to be because suppliers (in a competitive market) tend to get the most money at that point and buyers will tend to save the most money at that point.

I hope this helped you with understand basic economics! If you like this please comment and I might make more Thanks for reading!