Supply and Demand Real Life Examples That Will Help You!

Jul 2018

This cute and smart girl I met recently asked me if I wanted to go to the beach with her on the weekend. I took some time to think about it, weighing the pros and cons…Just kidding, of course, I immediately said yes. There are a lot of cute girls in Miami – but cute AND smart girls are in short supply!

Then just as I was imaging what our kids would look like, it hit me, and panic immediately started to set in. I realized I didn’t have a swimsuit to wear…shit!

More specifically, it meant that I needed to go shopping for a banana hammock ASAP!

“What is a banana hammock?” you ask.

It is another name for a Speedo and is the de facto standard for Canadian male beach attire in South Florida.

Anyway, I hopped in my Jeep and headed to the mall. However, I needed to make a couple of stops along the way.

My first stop was Starbucks, as I needed some caffeine to get me going and primed for my little shopping excursion. “Why is it that Starbucks can charge so much money for coffee and still be busy?” I asked myself.

After picking up some java, I needed to get some gas. “Man, it’s expensive. Why is it that gas is always more expensive in the summertime?” Yes, I talk to myself a lot. However, I will have you know that according to studies it’s a sign of higher intelligence – at least that’s what ‘I tell myself’.

My numerous personality quirks aside, I finally arrive at the mall and go to the banana hammock store and wow are they ever expensive. Not that I shop for banana hammocks frequently, but they really do seem more expensive than I recall. Oh well, I need to impress Tiffany, so it will be worth it. So…

I bite the bullet and buy one…

Whether it made my ass look fat is neither here nor there.

And as for how the date went, we will discuss that a little later.

But first, let’s discuss…

…what my story up to this point has to do with self-improvement.

My story illustrates an important concept which affects everything in our lives. That concept is…supply and demand, and it appeared in my story above several times, namely:

The cute and smart girl – Like I said, cute girls in Miami are abundant, cute and smart girls – not so much, so they are in high demand. Since supply is short and demand is high, you need to act quickly and pull out all the stops (i.e. banana hammocks on beach dates are a must).

The coffee – People want coffee and are willing to pay $6 a cup or whatever it is, therefore price remains high.

The gas – More people drive in the summer, meaning demand for gas increases, and therefore price increases.

The price of the banana hammock – Too many banana hammock-wearing Canucks in South Florida means demand for them is high, also meaning stores can charge more for them.

What is Supply and Demand?

We will get to some supply and demand real life examples in a minute but first, let’s briefly discuss some concepts.

The concept of supply and demand can be explained in its simplest form as the relationship between what is available and how much we want of it.

Supply and demand as an academic field of study can get quite complex, so we will try to keep things simple and actionable (and as always, entertaining!)

Again, demand is how much an item is wanted, while supply is how much of an item is available.

The prices we pay for things are many times dependent on the intersection of the forces of supply and demand.

Typically, higher demand means higher prices, while higher supply means lower prices.

Higher prices usually decrease demand and increase supply, whereas lower prices increase demand and lower supply.

A few other scenarios related to the supply side of things:

If supply increases and demand remains the same, then the price decreases.

Let’s take bananas as an example and say the weather is perfect for growing bananas which increases the supply. This means prices will drop so that the stores can sell all the bananas they have.

If supply decreases and demand remains the same, then the price increases.

On the other hand, let’s say the weather sucks for growing bananas which decreases the supply. This will mean prices will go up because there are fewer bananas to sell.

If supply remains the same and demand increases then price increases.

Now, if the supply remains the same, but all of a sudden people are on a banana kick, it means prices will increase as more people are competing for a fixed number of bananas.

If supply remains the same and demand decreases then price decreases.

On the other hand, if the supply remains the same but fewer people want them, then there will be an oversupply of bananas.

It all makes sense if you think about it.

Let’s Take a Look at Another Example…

From the world of business to show how supply and demand work related to housing:

Let’s say, hypothetically, a large university in a college town shuts down unexpectedly. You would expect that professors would need to re-locate and students would no longer live in the city. This would reduce the demand for housing, causing house prices to drop.

Why Supply and Demand is So Important?

Seeing as how supply and demand is one of the basic concepts of economics and how much it affects our day to day lives, it is crucial that we have at least a basic understanding of it.

Supply and Demand Real Life Examples – Use It or Lose It

Again, it’s a complicated concept and we won’t get into complexities but these supply and demand real life examples will demonstrate how you can use the concept of supply and demand to your advantage:

Jobs

Look for jobs where demand is high, and supply is short. For example, there is currently a nursing shortage in the United States – so it is a good time to become a nurse.

Salaries

As we know there is a big difference between the salary for doctors versus the salary for cab drivers. The supply of doctors is lower due to the difficulty of becoming a doctor and the demand is high as doctors are in short supply. This means that they can command a higher salary. Whereas, becoming a cab driver is not as difficult, so the demand for them is less, and the salary is less.

Shopping:

There are numerous examples where you can use supply and demand when shopping.

Buying stuff that isn’t in season

A lot of times, stores will reduce prices on items that are not in season because the demand is low, and they have excess supply they want to get rid of. For example, buying Christmas decorations after the holidays are over. Or buying clothes that aren’t in season such as winter boots in the summer.

Shopping online

For example, living in Miami, it’s hot here all the time, so shorts and sadly for me, banana hammocks are always in demand. One way around this is to shop online.

Buying when prices are low and stockpiling

Sometimes you can take advantage of buying something when prices are low and putting it away.

Buying a house

Houses in some areas are cheaper than in other areas due to the fact there is less demand. For example, you may be able to get a much bigger house for the same price outside the city since demand is less.

New movies

I just heard a commercial for the new Jurassic Park movie on the radio. The radio host said it was one of the only times he has bought tickets ahead of time because demand was so high. That’s the strategy, buy ahead.

Theme Parks

Many theme parks offer discounts on days where demand is projected to be low. So, save money and enjoy smaller lines!

Flights

Same goes for flights, if you know your travel dates ahead of time you may be wise to buy now because as the time to fly comes closer, demand may rise, and supply may fall, driving up prices. Another strategy here is to fly at off-peak days and times to take advantage of lower prices caused by lower demand and higher supply.

Driving

If your schedule allows it, commute at off-peak times as there will be less demand (other cars) and more supply (more room on the road).

Restaurants

Hate waiting for a table? Want to take advantage of specials and discounts? Try going on an off-night.

Vacationing in the offseason

Ironically, I was having a conversation with a friend at the gym the other day who was thinking about going to Florence, Italy this summer. However, the demand is so high that flights prices are insane. So, instead he is going to go in the off-season when it’s less busy and flights are cheaper.

Dating

Got a bee in your bonnet to get married. You may want to move somewhere where supply and demand are more in your favor. According to the NY Times, these are the cities to find single men and women. So if you are looking to get struck by Cupid’s arrow…get packing!

That’s it for my supply and demand real life examples…

You are probably wondering how my beach date went?

It was fun, the girl was great, and we had great chemistry, or so I thought.

I called her back a couple days later and asked if she wanted to go out on the weekend. She said she would love to, but she had a date with a guy named Jacques on Friday and a guy named Pierre on Saturday.

Seems like the supply of banana hammock wearing Canadians in South Florida is working against me!

As for why there is no picture of me in the banana hammock on this blog post? Simple, demand wasn’t high enough!

Until next time, pay attention to supply and demand, keep rockin’ those banana hammocks and as always…PYMFP!

–Rick

When to Use It:

When you are purchasing things or making decisions where supply and demand are involved such as the supply and demand real life examples above.

What Do You Think?

Where else have you used supply and demand in your life? Do you have any supply and demand real life examples of your own? Please share in the comments below!

If you enjoyed this post, it would mean the world to us if you shared it with people you care about via any of the social media platforms below!

References

https://owlcation.com/social-sciences/Economics-For-Beginners-Supply-And-Demand

http://www.auburn.edu/pctl/models/CarTech/SupplyDemand/Lesson2.html

https://courses.lumenlearning.com/wmopen-introbusiness/chapter/discussion-supply-and-demand-in-your-life/

https://budgeting.thenest.com/principles-economics-relate-daily-life-23937.html

http://demandandsupplyinmylife.blogspot.com/

https://srsport.com/s-r-sport-infinity-canada-water-polo-suit-male/

https://www.nytimes.com/2017/02/10/realestate/the-best-cities-to-find-single-men-or-women.html

https://www.ducksters.com/money/supply_and_demand_examples.php

4 Replies to “Supply and Demand Real Life Examples That Will Help You!”

Abhijeet says:

January 23, 2020 at 11:56 am

Excellenent explanation man

1. Rick Melnyck says:
  
  January 23, 2020 at 2:33 pm
  
  Hi Abhijeet, thanks for the kind words and for reading. Best regards, Rick
  
Dave Savadge says:

July 9, 2018 at 1:19 pm

Excellent shopping advice. In a perfect world, supply and demand equals a net zero sum. There are enough widgets available for everyone who wants a widget. The price of a widget remains constant. But, as we all know, there is no such thing as a perfect world. All sorts of external forces influence the market – many of which are detrimental and artificial – think government interference with their excessive taxes, tariffs, quotas, and regulations. Then there are natural forces- two severe hurricanes wipe out the Central America banana crop. A real life example close to home – the severe wild fires in Napa and Sonoma Counties will directly impact wine production. Very few wineries burned, but the vines of the other wineries absorbed the smoke, which will give the grapes a musky taste. This will negatively impacts the region’s wine production for this year and next, as who wants to buy a “smoky” wine. But other wine making regions, such as the Central Coast and the Santa Cruz mountains, will benefit from increased sales.

.Housing costs have gone exponential out here, such as a 2 bedroom apartment renting at $3000 per month in the metropolitan areas. People like us, who have lived here over 30 years, like to say that we are living in the First National Bank of House. The value has quintupled or more since we bought. Why? – simple. More tech jobs = more trained people = need more houses + none being built. Supply and Demand.

I really do not believe the supply of banana hammock wearing Canadians in South Florida is that overwhelming. It’s more the supply of former Borscht Belt snowbirds deciding to live there permanently. I’d gladly move there, but my CYT refuses to leave the grandkid.

1. Rick, Bri and Howie says:
  
  July 9, 2018 at 3:46 pm
  
  Great examples Dave, that is insane about the housing costs, yikes! You are pretty wise re: the supply of banana hammock wearing Canadians, lol, tough to put over on you! Yeah, it’s pretty awesome here. Borscht – that’s a word I haven’t heard for a while, my late Grandma used to make it for us all the time, great stuff!