Track B · MarketsNode B1
Supply and demand, properly
Layer 1 · Pocket
~ 30s readThe thirty-second answer
What is this?
Supply and demand aren't two crossing lines. They're two distributions of willingness — to sell, to buy — meeting at a price that clears the most desperate of each. The trades that actually happen are the inframarginal ones; the marginal trade just sets the price.
Why should I care?
Re-derive supply and demand this way once and you'll never read a price the same way. The static picture becomes a story about who captured surplus and who paid it.
What's actually happening at a price
- Marginal buyer
- exactly indifferent
- Marginal seller
- exactly indifferent
- Inframarginal trades
- all the rest
- Total surplus
- area between lines