Answer to Question #84569 in Microeconomics for nick

Question

Usually when people buy or use more quantity of a given product, they expect the price per item to reduce or stay the same.
E.g.: I buy a Gold bar today, the rate is USD $13,510. If I buy 5 gold bars it would be $13,510 x 5 = $67,550
Can you think of one example where this price-volume rule is not obeyed? i.e. the more you buy, the price per item gets higher? (Note: don’t answer with gold, silver, other precious metals etc.). In the above example, it would mean that 1 gold bar costs USD $13,510 but 5 gold cars would costs more than $67,550. Please explain what factors would cause the price-volume rule to not be obeyed.

Answer 1

Price–volume trend is a technical analysis indicator intended to relate price and volume in the stock market, it is based on a running cumulative volume that adds or subtracts a multiple of the percentage change in share price trend and current volume, depending upon the investment's upward or downward movements. This price-volume trend can be true for the stock market, but not to explain the changes in demand and prices for usual goods.