Twelve townsfolk want apples. Twelve farmers grow them. Everyone has a price in mind β watch what happens when the stand opens at the wrong price, and how it finds the right one.
π§βπΎππ§ The Apple Stand
βοΈ
βοΈ
buyers wait here
farmers wait here
$4
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Pick an opening price and press Play to open the stand.
π Supply & demand
Demand β buyers
Supply β farmers
β Equilibrium: $10, 6 apples
Press Play to see today's price on the graph.
Is $4 a fair price?
β
Not started yet
π The story so far
Waiting for the stand to openβ¦
π€ Why the price settles down
Every buyer has a top price they'll pay before they shrug and walk away.
Every farmer has a lowest price they'll accept before they'd rather keep their apples.
If the price is too low, tons of people want apples but few farmers will sell β some buyers go home empty-handed, so next time they offer more.
If the price is too high, farmers show up with baskets nobody buys β so next time they ask for less.
The price stops moving only when the number of people who want to buy exactly equals the number of farmers willing to sell. That's equilibrium β everyone who wanted a fair deal got one.