Why are price and sales not inverse in this case?

I am looking at some data for average selling price and quantity sold. The price for the product stays roughly the same over 4 quarters however the quantity sold is very volatile over the 4 quarters why are price and sales not simply inverse?

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One Response to “Why are price and sales not inverse in this case?”

  1. Victor says:

    Because a demand function includes not only the price of the good or service.

    The quantity demanded depends on:

    price of the good or service as determined in conjunction with supply
    prices of complementary or joint goods or services [the strawberry and cream effect]
    the availability or shortage of complementary goods or services
    prices of competing goods or services
    advertising and other marketing activity by competitors
    the real incomes of prospective consumers
    changes in taste or fashion.

    So the data you have is showing only the first of these, and ignoring the other influences and effects.
    Each of them could and will produce a shift of the demand curve, which will appear in your data as a quantity-change even when price is stable.
    For example, if real incomes rise then the quantity demanded of a "normal" good [non-essential and not inferior] is expected to rise even if price remains the same.
    Likewise, if a new better Samsung Android hits the market, sales of other clever phones will be affected, no matter what they do with prices.

    That is why the usual S-D graph cannot show the entire market situation.

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