An Increase in Demand

Union Leader, New Hampshire, January 2, 2005

Firewood demand soars, as does its price

"Sky-high prices for oil, kerosene and other fuels have put pressure on an alternative heating source in New Hampshire and all of New England: good, old-fashioned firewood."

An increase in the cost of a substitute has lead to an increase in the demand for firewood. At the old price, the quantity demanded is now greater than the quantity supplied. The shortage is a signal to the market, so this increase in the demand for firewood leads to an increase in the price of firewood.

Are there other ways to allocate scarce resources rather than by the price mechanism?

"Jeff Taylor at Fireplace Village in Bedford said woodstove sales are up substantially. So much so, one maker of woodstoves, Hearthstone, has a waiting list two months long."

How about a waiting list?

A time series graph showing quantities or prices over time should not be confused with a supply and demand graph.

A supply and demand graph is a snapshot in time which we make dynamic by showing the shifts of curves over time.