There’s invisible supply, and visible supply. Visible supply includes the amount of a commodity that’s being stored and transported—any that's available for sale right now.
It’s true...people these days sell stuff that doesn’t exist yet. That’s what futures contracts are all about. For instance, a farmer might sell next year’s wheat this year via a futures contract. That wheat wouldn’t be a part of the visible supply.
Only this year’s wheat, whether it’s stored or in trucks, is the farmer’s visible supply. Likewise, the farmer could enter a futures contract with visible supply, writing in the for-sure guaranteed amount of wheat based on the amount that’s in storage right now. It’ll just be delivered...in the future. And no, Doc Brown has nothing to do with it.
The visible and invisible supply are important concepts when you think about supply and demand, especially for perishable goods. The visible supply is current demand, but the invisible supply (the expected but not-yet-available supply of the future) affects demand, too.
For instance, if there was a dust-bowl type situation, that would imply the invisible supply will be sparse, making prices for the current visible supply skyrocket, assuming a lack of a good substitution.
In non-Dystopian scenarios, options, futures, and forward contracts all have weird effects on current demand. The whole reason investors enter these contracts instead of just buying now is because they're forward-looking, which makes expected supply affect current demand. Plus, it can be great for both buyers and sellers to lock in prices. It’s harder to run a business with fluctuating prices, but futures contracts can provide stability in commodity costs for businesses.
Related or Semi-related Video
Finance: What are Macroeconomics v. Micr...3 Views
And finance Allah shmoop What Our macro economics versus micro
economics Alright people Hedgehogs bumble bees raindrops dust bunnies Bedbugs
Bacteria protons corks you know Small micro the Empire State
Building the pyramids the Great Wall The you the continent
of Asia the Earth the solar system the galaxy the
universe the multiverse A You know big macro Well that's
the basic difference At least a frame of it between
macroeconomics and microeconomics Big versus small macro economics deals with
economic principles on a large scale National unemployment rates international
trade Central bank interest rate decisions tariffs on foreign made
fuzzy bunny slippers Like those things I have a pair
micro economics Yet it deals with topics closer to home
It's about individuals Home mortgages car payments life insurance retirement
accounts of individuals mostly the retail price of fuzzy bunny
slippers Right It's also about individual firms like payrolls insurance
figuring out how many bunny slippers Teo make before Christmas
But the economy has been slow GDP only edged up
zero point one percent last quarter and unemployment rates have
ticked up to their highest level in three years The
Federal Reserve is worried and his considering lowering interest rates
Yeah those air concerns of macro economics Bunny slippers cost
twenty five bucks Regular slippers Cost Fifteen bucks Your daughter
wants the bunny slippers for Christmas but it's been a
rough year you know because the weak economy you've got
laid off a quarry Meanwhile your side gig tuning electric
bassoons has been slow Can you afford the extra ten
bucks for the bunny slippers over Just the normal rectangular
ones right Well that's a question of micro economics for
the bunny slipper firm While they might see that the
economy has been slow there are news reports about Cory
layoffs and the cratering electric bassoon market Earlier in the
year they bought a large supply of bunny slippers from
their Chinese manufacturing partner They don't sell enough of them
Well they'LL get stuck with a bunch of bunny slipper
inventory they can't get rid of should they drop the
price of the slippers like cut prices down to twenty
bucks from twenty five make sure they get rid of
most of the inventory by Christmas We'Ll those air questions
of micro economics as well Both types deal with the
same basic components though the difference has to do with
scale Both macro and micro economics deal with the function
of markets For instance the island nation of Macro vain
eah sees a decline in GDP In a panicked attempt
to fix the problem the central bank floods a country
with its currency macro dollars Inflation suddenly spikes All right
that's a macro economic issue Because inflation has jumped food
gets more expensive The all you can eat half ear's
delight meal at the buffet used to be nineteen ninety
nine But after the spiking inflation while now the price
rises to twenty nine ninety nine almost overnight you and
your family now have to decide well how many times
can we afford that meal per week You used to
do it four times Well now you'LL have to cut
down to twice a week and eat homegrown turn ups
the other two nights Yeah that's a micro problem Another
example Both micro and macro economics deal with supply and
demand Macro Vania discovers a small island inside its territorial
waters It turns out to have a large guano supply
on it's guano is the droppings of bats or seabirds
Finding an island full of it probably doesn't seem like
a big deal but it can be used as you
know fertilizer Mohr Aggregate supply of guano means prices for
fertiliser in the country fall right More supply same demand
Prices fall Also macro Vania is able to export toe
other countries helping its balance of trade and allowing it
to bring in more imports That's macro You can use
that cheap fertilizer to grow more Turn up You sell
them on the side Teo Get a little extra cash
Now you can afford one more night of Jeffers Delight
each week That's micro Well Micro economics doesn't just impact
households It operates on the scale of businesses as well
the guano trading firms that scrape it off the small
island and ship it overseas That's micro the small grocery
store that buys your excess turn ups Yeah that's micro
too OK so quick and very dirty Review Macro economics
It's the big stuff The national economy global trade interstellar
currency exchange total aggregate demand and supply as it relates
to inflation gross domestic product national income interest rates unemployment
and all kinds of changes price levels and liquidity That's
macro So then we have Micro Micro is all about
the individual of firm or corporation either smaller big business
or families and individuals And by the way those recording
devices the government has implanted in your brain Yeah you
hope those air microchips and definitely not macro chips That's 00:04:43.842 --> [endTime] not going to feel good in the morning
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