The Idea

Prices of most goods and services are determined by mass behavior and the interplay of who wants something and who has it.

Fundamentals

Finding Truth

Mental Models

• The more people want to buy property in the inner city or at the beach, the more prices will go up — especially because the amount of such property available is limited.

→ The demand for beachfront houses meets limited beachfront space and supply of these houses.

• The more people want to eat at the airport, the more expensive airport food will get — especially because there is a very limited number of food stalls at each terminal.

→ The demand for food at the airport meets limited mobility (closed terminals) and a restricted supply of restaurants on small space.

• The more people want to see entertaining football matches, the more expensive it will become to sign and pay for superstar players — especially since there are only very few people who can play football at the elite level.

→ The demand for professional football meets a limited number of players with adequate skills.

• The more companies need tech-savvy engineers, the more salaries for programmers will go up — especially because there are only so many people who can work with computer code well enough.

→ The demand for highly skilled workers meets a limited supply of well enough educated individuals.

“The price of ability does not depend on merit but on supply and demand.”

Explore

Resources