Mathematical understanding

These things can be overwhelming, and you might not even need these calculations, but just in case.

In our player-driven economy, the ability to analyze data, optimize pricing, and predict trends separates the rich from the poor. This section dives deep into economic models, financial equations, and strategic maneuvers to help you outthink your competition.

“The market is a device for transferring money from the impatient to the patient.” — Warren Buffett

Let’s explore supply-demand calculations, pricing strategies, market manipulation tactics, and investment models with real numerical examples.

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📊 1️⃣ Understanding Supply & Demand with Math

The fundamental equation of pricing is:

$$P = \frac{D}{S} \times P_{\text{base}}$$

Where:

• P = Final Price

• D = Demand

• S = Supply

• $P_{\text{base}}$= Base Price of the Item

Example Calculation

🔹 Scenario 1: Stable Market

• Total Wheat Supply = 10,000

• Total Demand for Wheat = 10,000

• Base Price of Wheat = $1

$$P = \frac{10,000}{10,000} \times 1 = 1.00$$

➡ Wheat remains at $1 per unit.

🔹 Scenario 2: Supply Drops by 50%

• New Wheat Supply = 5,000

• Demand remains at 10,000

$$P = \frac{10,000}{5,000} \times 1 = 2.00$$

➡ Wheat price doubles to $2 per unit.

🔹 Scenario 3: Demand Increases by 30%, Supply Stays Constant

• Demand = 13,000, Supply = 10,000

➡ Wheat price rises to $1.30 per unit.

Key Takeaways:

✔ If supply falls, prices rise. ✔ If demand rises, prices rise. ✔ If both rise proportionally, prices remain stable.

"Price is what you pay. Value is what you get." — Warren Buffett

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💰 2️⃣ Setting Optimal Prices: Three Key Strategies

Pricing is not random—smart players use math to ensure profitability.

1️⃣ Cost-Plus Pricing: Guaranteed Profit

$$\text{Selling Price} = \text{Total Cost} + (\text{Total Cost} \times \text{Profit Margin})$$

🔹 Example:

• Wheat Cost = $1 per unit

• Energy Cost = $1 per unit

• Total Cost for 1 Food = $4

• Desired Profit Margin = 30%

$$\text{Selling Price} = 4 + (4 \times 0.3) = 5.20$$

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2️⃣ Market-Based Pricing: Stay Competitive

$$\text{Selling Price} = \text{Market Average Price} \times (1 \pm \text{Adjustment Factor})$$

🔹 Example:

• Current Market Price for Factory Goods = $2.50

• You want to undercut by 5%:

$$2.50 \times (1 - 0.05) = 2.375$$

➡ You sell at $2.38 to attract more buyers.

3️⃣ Psychological Pricing: Trick Buyers into Spending More

🔹 Example 1:

• Selling at $4.99 instead of $5.00 increases purchases.

🔹 Example 2:

• Bundle pricing: 10 Food for $47 instead of $5 each makes players feel they are getting a deal.

➡ Boosts sales without lowering real value.

“People don’t buy products. They buy better versions of themselves.” — Seth Godin

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📈 3️⃣ Predicting Market Trends & Investment Timing

The Market Follows Cycles

$$\text{New Price} = \text{Base Price} \times \left(1 + \frac{\text{Demand} - \text{Supply}}{\text{Supply}}\right)$$

🔹 Example Calculation:

• Energy Base Price = $1

• Demand increases by 40%, but supply remains constant:

$${New Price} = 1 \times \left(1 + \frac{40}{100}\right) = 1.40$$

➡ Energy price increases to $1.40.

"Be greedy when others are fearful, and fearful when others are greedy." — Warren Buffett

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🕵️‍♂️ 4️⃣ Market Strategies

1️⃣ Hoarding Strategy: Artificial Shortages

$$\text{Future Price} = \text{Current Price} \times \left(1 + \frac{\text{Percentage of Hoarded Supply}}{\text{Total Supply}}\right)$$

🔹 Example:

• You buy 40% of the Wheat Supply

• Current Wheat Price = $1

$$1 \times \left(1 + \frac{40}{100} \right) = 1.40$$

➡ Price increases to $1.40, and you sell at 40% profit!

✅ Best time to hoard? Right before demand spikes (seasonal changes).

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2️⃣ Collusion Strategy: Price Fixing

$$Fixed Price=Average Market Price+(Competitor Agreement Factor×Average Market Price)$$

🔹 Example:

• Market Price of Food = $3.75

• All Food Factories agree to increase price by 20%

$$3.75 + (0.20 \times 3.75) = 4.50$$

➡ All sellers now make more profit without competition.

"A cartel is a group of competitors who agree to restrict supply, raise prices, and share profits." — Economic Principle

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3️⃣ Dumping Strategy: Destroying Competitors

$$\text{Dump Price} = \text{Production Cost} - \left(\frac{\text{Competitor Market Share}}{100} \times \text{Profit Margin} \right)$$

🔹 Example:

• Your Factory Goods Production Cost = $1.92

• Competitor has 50% market share

• You lower price by 50% of profit margin

$$1.92 - \left(\frac{50}{100} \times 0.50 \right) = 1.67$$

➡ Competitor loses money and quits, then you raise prices again!

✅ Aggressive, but ensures long-term market control.

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🏆 Final Strategy Summary: How to Win the Market

✔ Master supply & demand: Use mathematical models to predict price movements. ✔ Optimize pricing: Cost-plus for stability, market-based for competition, psychological pricing for sales. ✔ Time the market: Sell at peak demand, buy when prices crash. ✔ Manipulate wisely: Hoard scarce resources, create alliances, or force competitors out. ✔ Diversify revenue streams: Always have multiple income sources in case of market crashes.

🚀 If you apply these mathematical strategies, you won’t just survive—you’ll dominate the economy.

"In investing, what is comfortable is rarely profitable." — Robert Arnott

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🏆 Final Strategy Summary: How to Win the Market

✔ Master supply & demand: Use mathematical models to predict price movements. ✔ Optimize pricing: Cost-plus for stability, market-based for competition, psychological pricing for sales. ✔ Time the market: Sell at peak demand, buy when prices crash. ✔ Strategic wisdom: Hoard scarce resources, create alliances, or force competitors out. ✔ Diversify revenue streams: Always have multiple income sources in case of market crashes.

🚀 If you apply these mathematical strategies, you won’t just survive—you’ll dominate the economy.

"In investing, what is comfortable is rarely profitable." — Robert Arnott