Something on a Peter Klein video about price determination that I'm simply not getting.
So the subjective valuations(of buyers) for some item are like this
300 dollars
275
250
200
While the valuation of the seller is like this
The question is where is the equilibrium going to be? The answer is that it is between 275 and 300.
Why though? I would figure that it would be between 200 and 300 because someone who wants to pay 300 would gladly pay 200 while someone who can only pay 200 would gladly pay 200 and someone who wants to sell for 200 would gladly sell for any price in the range 200-300.
Most people are familiar with the idea of an 'auction' so under this assumption I would recommend that you lean on that for understanding.
There is an item that the seller will sell if there is a bid for more than $200
There is one person who will bid to buy if the price is anything less than $200.
These guys won't trade.
Then the next bidder who will bid to buy if the price is anything less than 250$.
if only these 3 people are in the market, the seller and the 2nd buyer can strike a deal between 200 and 250.
but they arent.
there is someone who will bid to buy if the price is anything less than 275$.
so he outbids mr 250. So the price might be between 250 and 275.
then repeat this analysis for the final character.
result is the price is between 275 and 300.
Its an example of competition amongst buyers raising the price.
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
I'm not sure if this is the correct answer since I still have a lot to learn about economics, but I think it would be between 275 and 300 because the buyers who have that type of money would easily outbid the buyer who is only willing to spend 200. The seller of course, wants to sell at the highest price he possibly can, and since he is the only seller in this situation, the price can't go below 200, because in his mind he would be taking a loss. I'm pretty sure this has to do with marginal utility.