Can anyone explain how to read that first graph? Like, there's a line for demand, say, but given the axes labels, it seems to say "for greater demand, the price goes down", so the exact opposite of what basic price theory predicts.
Same for the supply lines, just the other way around.
Also, the use of straight lines indicates a linear relationship. Is that really the case in practice?
So you're reading it as a "prerequisite chart"? That seems odd because the common way to read graphs is that what's reported on the y-axis is a function of the values of the x-axis.
I find it also hard to read it that way when I look at that "Price in February -> Price in April" annotation: if those two points on the y-axis mark points in time, then so do the correlating points on the x-axis. I can only read that as "from February to April, the demand went up while the prices went down".
I suppose one thing they're trying to express here is the idea of the equilibrium price of oil, by marking the intersection of the demand line with the two supply lines. However, why they are lines in this graph in the first place, or why they are located at these specific positions is unclear to me.
If you want to read it as one would normally, where the X axis is the input variable, you could read it as "For a given quantity of demand, what is the maximum price the market can sustain?" So if you want to sell higher quantities of oil, the price has to decrease. The supply side is the opposite direction since costs go up as quantities go up (ignoring efficiencies of scale).
Since the graph is without units, the only relevant of their positions are the signs of the slopes, and that you need a higher price to supply oil at any given quantity (hence the Straight closed" line being higher on the graph).
kleiba2 · · focus · HN ↗
Same for the supply lines, just the other way around.
Also, the use of straight lines indicates a linear relationship. Is that really the case in practice?
317070 · · focus · HN ↗
kleiba2 · · focus · HN ↗
I find it also hard to read it that way when I look at that "Price in February -> Price in April" annotation: if those two points on the y-axis mark points in time, then so do the correlating points on the x-axis. I can only read that as "from February to April, the demand went up while the prices went down".
kleiba2 · · focus · HN ↗
arijun · · focus · HN ↗
Since the graph is without units, the only relevant of their positions are the signs of the slopes, and that you need a higher price to supply oil at any given quantity (hence the Straight closed" line being higher on the graph).