Econ 101 as it relates to straight razors
To elaborate on my post from earlier:
What "supply and demand" really means:
We can plot supply and demand on a graph. The horizontal axis represents the quantity of a given good and the vertical axis represents the price.
Lets first think of this in terms of production, say Fred is a maker of custom razors. He will be willing to make more razors if they sell for $1000 than he will if they sell for $100. Thus, a typical supply curve has an upward slope. We just need to think of the supply curve in this case as being the entire population of people that have razors to sell, rather than one individual. We can even look at specific supply such as Filarmonica razors. If they sell for $100 only a few people will probably want to sell theirs. If they sell for $1000, lots of people will sell them. We still have an upward slope on the supply side. Note that when demand goes up, the supply curve typically doesn't change. Prices go up and more will be supplied, but that's already reflected on the curve. It takes a market force affecting supply available at all price levels to move the curve.
The demand side typically has a downward slope. Lots of people would be willing to buy Filarmonicas for $50, few people would be willing to buy them for $1000. (we'll get into the effects of psychology in a bit...) We are dealing with a relatively small market; it only takes a few guys going nuts over a particular brand of razor to create a very steep curve. The equilibrium price goes way up, even though only a few people are willing to pay that price. Note that when supply moves, the demand curve typically stays the same. Prices will go up or down, and the quantity bought go up or down, but that is already reflected in the curve. It takes a change in quantity demanded at all price levels to move the curve.
For now, we just need to agree that the supply slopes up and the demand slopes down.
Where those curves cross is called the "equilibrium price" and that is the typical market price for a product. In this case the supply curve and the demand curve for Filarmonica razors happens to cross at a high price. Things that will cause a change in the price are things that cause the supply curve, the demand curve, or both to shift.
As Holli4Pirating mentioned, there are lots of Filarmonica razors waiting to be sold. The sellers are smart enough to keep them scarce in the marketplace. If they listed all of those Filarmonicas at one time it would shift the supply curve to the right (more quantity, same curve) and result in a decreased price for those razors. Anytime more supply is added, the supply curve shifts right. Anytime supply is decreased, the curve shifts left. In economics, the term "scarcity" refers to how much supply is available at a given time; the horizontal position of the supply curve. So you are both right: while Filarmonicas may not be scarce in the world, they are scarce in the marketplace, which keeps that supply curve to the left.
Demand works in a similar fashion. The slope of the curve will stay fairly consistent, but when razors are talked up the entire curve will shift to the right. More demand has been created at all price levels. If a razor is talked down, the entire curve shifts to the left: less demand at all price levels. For instance prior to the hype, I might have only been willing to pay $50 for a razor, JimBob might have been willing to pay $200. When the razor gets talked up I might now be willing to spend $70 on it, and JimBob might now be willing to spend $300... There might be small changes in the slope of the curve, but it will still be an downward curve, and the entire curve will move when a razor gets bragged up.
There are a few notable situations that pertain here:
Veblen goods are luxury items that are perceived to have a higher value because they are expensive. The slope of the demand curve for these items goes up: as they go up in price, the demand gets higher. I don't think there are any razors that have fully achieved this status, but there are a couple that are close.
Bandwagon jumping, in economics, refers to situations where people believe in an item's value because other people believe the same. This causes dramatic shifting of the demand curve.
Granted it's far more complicated than that (the curves won't have perfect slopes, and there are other factors in play), but that's the basics of supply and demand as it pertains to razors.
Same pic as before: Razor is hyped, demand shifts right, price goes from P1 to P2:
(note that if a razor was talked down, the same would work in reverse...)
(You could do the same thing by keeping the demand curve in place and shifting the supply curve... Price will go up or down depending on which way the curve moves.)
http://4.bp.blogspot.com/_tqLg87shxD...and-demand.png