- Introduction
- Opportunity Cost
- Supply and Demand
- CYA!
- Frequently Asked Questions
How this Guide works: This Guide is divided into three sections. The first section, Introduction, teaches you some very basic Skills needed to understand the rest of the Guide. This first section will not help you very much with RuneScape, but if you are not familiar with this general information, then you may not understand the rest of the Guide. If you are confident you understand these concepts, feel free to skip straight to section 2. Even if you do not completely understand Section 1 after reading it, you can continue to read, but you may not understand some sections of the Guide. Section 2 deals with “Opportunity Cost” and will help you to decide what you should do in order to make Money most effectively. Section 3 deals with Supply & Demand. This section will help you to understand why Items have the prices that they do and how these prices might change in the future.
You may find a lot of "learning" in this Guide. I'm sorry if you don't want that; if you don't want to learn anything, this Guide isn't for you. Economics is a large topic; what I did was select some very specific, simple topics that don't require too much effort to understand. Luckily, the two topics I chose are by far the most important and useful topics you can learn. However, for you to understand HOW to make Money well and HOW pricing works (the two major things discussed here), you need to know a few basic "tools" or "concepts" within economics. They are not very difficult, but you can't understand the price of something without a little knowledge on supply & demand, for example. Incase you're wondering, I've taught these concepts to several People I know in-Game. The ones who used it all started earning a lot more and were able to buy/sell things more wisely. I will try to make this as simple as I can. The person who wants to look smart takes something simple and makes it sound complicated. The person who really is smart takes something complicated and makes it sound simple. My goal is to be the "smart" person; I apologize if I failed.
Within these sections, I'll occasionally insert a "Test Your Understanding". These just have a few simple questions; if you can answer these, you have enough understanding of the topic that was just discussed. If you have no idea where the answer came from, you might want to re-read the section. This is done only to make sure you understand the topic before moving on. You may of course simply skip these if you understand the topic. However, if you do not understand the topic, the examples posed in these questions might help you to understand better. Lastly, for those who are very knowledgeable of economics, keep in mind this is only meant to be a simplified version and only covers a few topics.
Applications of this Guide So what will this Guide help you do? It will help you earn Money and predict the values of Items, as well as helping you to understand what is going on in the RuneScape economy. It will NOT tell you exactly what to do. In the end, you will still have several ways of earning Money that you will have to decide from. However, if you have 100 different ways of earning Money (for examples of different WAYS to earn Money read RuneVillage's Money Making Guide), this Guide will help you understand which three or four will be the most effective. You still won't be earning five million Gold Pieces an hour, but I've seen Players use this information to increase their income 5 times over. Lastly, the principles that I'm teaching here are the same principles that exist in the Economics of real life. If you're having trouble understanding them in an Economics class, explaining them in terms of RuneScape might help you understand better. Even if you're not in a class, understanding Economics in RuneScape will help to understand some of the things that go on in the real world.
What is Economics? dictionary.com defines economics as "the branch of social science that deals with production, distribution and consumption of goods.” A more practical definition might be “the way in which people distribute limited goods (items) amongst people who have unlimited wants.” This makes sense. If ALL the Miners in RuneScape are able to produce five million Coals per year, how does RuneScape decide who gets them? Everyone in RuneScape would like to have all five million of these, so there must be some method of deciding who gets what.
The Function of Money: The preferred way of distributing these Goods is through Money. Money serves three functions: Its store value, it serves as an intermediate to trading, and it provides a measure of value. Only the second two functions are important in this Guide. Let’s say that Bob wants to buy Coal and has Iron to sell. Bill has Coal to sell and wants Mithril Ore. Because Bob doesn’t have any Mithril Ore, he couldn’t trade Bill for his Coal. However, Bob is able to sell his Iron Ore to someone else in exchange for Money. Because Money is generally accepted by everyone, he can trade this Money to anyone (including Bill). Thus, Money eliminates the need to have the exact Item someone is looking for in order to receive the one you are looking for. This is Money’s function as an intermediate of trade.
You might also think of Money as a reward for something you gave someone in the past, except you have not yet claimed that reward. If you're bidding more Money for an Item, it means that you're really bidding more effort or Items that you traded to someone else in the past. So Money really just represents Goods and Services. It can be hard to think of little pieces of Paper and Metal as being this. But if you don't understand, think of it this way. You do a favor for your teacher, so your teacher says that you can skip your next homework assignment. But you reply "But I've already done that assignment." So instead, your teacher gives you a slip of paper; you can hand it in at any point in time to skip a homework assignment. This is somewhat like Money. You did the favor in the past, and your reward was a free homework. But instead of using it now, you decide to use it up later. The piece of paper REPRESENTS your reward for something you did in the past, even though the piece of paper itself is worthless. Of course, if this was really Money, you could give this slip to any teacher to get out of a homework assignment.
The measure of value is a little simpler to understand. With Iron Ore, a person can say Iron Ore cost 100 Gold Pieces each. This is a lot easier than saying that you’re selling an Iron Ore for 0.2 Mithril Ore, 10 Coppers, 5 Spades, and so on. Because Money is accepted by everyone, saying the price of something in Gold Pieces only requires one price to be set. If you know Mithril Ore, when someone announces the price of an Iron Ore, you will automatically know how many Iron Ore are equal to one Mithril Ore. This is much easier than listing the price of the Iron Ore in terms of EVERY Item in the Game. Throughout the Guide, I may just convert the Item I'm talking about into Money (when that happens, I'll tell you how many of the Item you have and what one of the Item is worth). So when you see me using the Money that the Item is worth instead of the Item itself, you'll know why I could do that.
Plotting a Line: If you understand what y = mx+b means, you can skip this section; this section was only meant for those who haven't learned what a line equation is. For those who don’t know, a line follows the format of y = mx+b, where m is the slope and b is the y-intercept. What they mean isn’t important for this Guide as long as you can use the equation. To solve this line, you replace x with a certain value of your choosing. Y will turn out to be exactly one value. If you repeat this with several values of x, you’ll start to see a pattern. Let’s use y = 3x + 5 as an Example. When typing these, a lower case "x" will represent the letter x, while a capital "X" means multiplication (so 3 X 5 = 3 times 5 or 3 multiplied by 5, meaning 15). At the point x = 0 on a graph, y = 3 X 0 + 5, or y = 5. At x = 1, y = 3 X 1 + 5, or y = 8. At x = 2, y = 3 X 2 + 5 = 11. You can continue this over and over. Connecting all these points gives you one line. ANY point along the line is a point where, if you plugged in that value of x, you’d get that matching value of y. If you were to draw a graph of this line, it would look like this:
You don’t need a complex understanding of lines to understand this Guide. You only need to know a few things. First, you need to understand that plugging in a value of x gives you ONE value for y; but if you change x, you get a different value for y. Second, you need to understand that the line drawn shows all possible values for x and y. If you understand these two things, that should be enough.
Question 1: You have a line represented by y = 4x. Find the values of y at x = 0, x = 1, x = 3, and x = 10.
Answer: View Answer At x = 0, y = 4 X 0 = 0. At x = 1, y = 4 X 1 = 4. At x = 3, y = 4 X 3 = 12. At x = 10, y = 4 X 10 = 40.
Question 2: You have a line represented by y = 10x + 3. Find the values of y at x = 0, x = 1, x = 3, and x = 10.
Answer: View Answer At x = 0, y = 10 X 0 + 3 = 3. At x = 1, y = 10 X 1 + 3 = 13. At x = 3, y = 33. At x = 10, y = 103.
Models: When representing a real life situation, we often must simplify the problem in order to solve it. A model can be a drawing, an equation, a graph… pretty much anything that represents the situation. When we make a model, we remove pieces of the problem that don’t significantly affect the solution. Take Nature Runes for example. When we are dealing with a problem involving Nature Runes, we can usually neglect the color of the Rune and the way that the Nature Altar looks. These may be factors, but they are so insignificant that including them wouldn’t help. In this example, we would primarily look at factors such as the price of the Runes and how many are bought/sold. Throughout the Guide, we will ignore factors such as Experience, enjoyment, and how much clicking the task requires. These are factors as well, and they could be included in the model, but it would make it much more difficult to understand. Keep in mind that prices may change over time, but the basic idea of the model remains the same. You might come to a different conclusion when different numbers are used, but you still calculate your answer the same way. Ok, now that the boring stuff is out of the way, we can get onto the more interesting things.
An Example To understand the concept of opportunity cost, let’s start with an example that exists in RuneScape. Let us assume that you are making Nature Runes to earn Money. Let us assume that Rune Essence costs 25 Gold Pieces and you can Mine 1,000 Essence per hour. Let us also assume that Nature Runes cost 300 Gold Pieces each and you could make 500 of them per hour. The result would like look this:
| Item | Market Value | Amount you can obtain per hour |
| Rune Essence | 25 | 1,000 |
| Nature Runes | 300 | 500 |
Let’s say you have only three hours to play RuneScape per day, and you’re only interested in earning the maximum Money possible with these two activities. You have two Options: Mine your Essence and use it to Craft your Nature Runes, or buy your Essence and spend all your time Crafting Nature Runes. Which one will earn more Money? Most People would say, “Well, I get my Essence free if I mine it, so I’ll earn more Money, because I don’t have to pay for Essence.” Well, let’s see if that’s true.
Let’s look at Situation #1. It takes one hour to mine 1,000 Essence and it takes 2 hours to Craft that Essence into Nature Runes. Your end result? 1,000 Natures Runes. So, you earn 300 Gold Pieces per Nature Rune, and you Crafted 1,000 Nature Runes, so you earned 300,000 Gold Pieces.
Now for Situation #2. You spend all three hours Crafting Nature Runes, but you also lose Money because you have to buy Rune Essence. After three hours, you Craft 1,500 Nature Runes. You bought 1,500 Essence, and because they cost 25 Gold Pieces each, you paid 37,500. You Crafted 1,500 Nature Runes, and at 300 Gold Pieces each, you can sell them for 450,000 Gold Pieces. So the cash you earned is equal to the value of the Nature Runes minus the cash you paid for the Essence. Or, profit = 450,000 – 37,500 = 412,500 Gold Pieces.
But wait! In the first situation, you only earned 300,000 Gold Pieces. You spent the same amount of time but earned over 100,000 more! Where did that extra cash come from? Magic? Not quite (unless you consider economics to be Magic). The extra cash can be explained through opportunity cost.
Opportunity Cost Opportunity cost can be defined as "The foregone loss endured by consuming something." Most People don't know what that means, so a more simple explanation is "When you consume something, the value of the next-best-thing you could have consumed". There are two things to remember in the Nature Rune situation that will make this a little more clear. First, time is a resource. Many People think of Money as being the only thing they give up, but in reality, time is a very valuable resource. If you had more time, you could spend more time earning Money, and thus, you could sort of trade your time for more Money (this is the meaning of the saying "Time is Money"). Even without Money, time is still something you have to give up. You could have used that time to train Combat, to do a Quest, or even just to sit around and talk to your friends. Second, when we say “consume", we don't literally mean eating. Consuming something means you use an Item. So when you make Nature Runes, you consume Rune Essence in the process (for those familiar with Economics, could also consider Rune Essence an input and come to the same conclusions).
So what did we give up in the Nature Rune/ Essence Example? Primarily, time. Let's say that you decided to Craft Nature Runes. You could have also spent that time training Combat, Mining Essence, doing Quests, talking to friends, exploring new parts of the Map, chopping Wood... almost infinite possibilities. Realistically, you would have to decide which of these Options is the best, and what would be your "next-best-thing". In order to spend one hour making Nature Runes, you would have to give up one hour of doing your next-best-thing. Let us assume that Rune Essence is our next-best-thing. In one hour, you were able to make 500 Nature Runes. In that same hour, you gave up 1,000 Rune Essence. So Crafting one Nature Rune cost you the opportunity to mine two Rune Essence for yourself; this is calculated by dividing 1,000 Rune Essence (what you gave up) by 500 Nature Runes (what you chose to do instead), which gives two Essence per Nature Rune.
So you lose two Essence for every one Nature Rune you Craft. Let's say now you decide to Mine Essence. How many Nature Runes will you give up for every Essence you mine? Well, you can mine 1,000 Essence in one hour, and you can Craft 500 Nature Runes in one hour, which means that you're giving up 1/2 (one half) of a Nature Rune for every Essence you Mine. This is calculated by 500 Natures Runes divided by 1,000 Essence gives 1/2 of a Nature Rune for every one Essence. Notice that the opportunity costs are two Essence per one Nature Rune (2/1), and one Nature Rune divided by two Essence (1/2). If you are familiar with fractions, these are simply the reciprocals of one another (or the opposite, or the inverse), which is pretty much switching the top and bottom number.
So in summation, the opportunity cost of Item A is the NUMBER of Item B that you give up to get one Item A. You give up twp Essence to get one Nature Rune, or you give up 1/2 of a Nature Rune to get one Essence.
Question 1: You can Mine 100 Coals an hour. You can chop 100 Yew Logs an hour. Assume that these are your "best two Options". What is the opportunity cost of Coal? What is the opportunity cost of Yew Logs?
Answer: View Answer The opportunity cost of Coal is (100 Yew Logs) / (100 Coal) = 1 Yew Log per Coal. The opportunity cost of Yew Logs is (100 Coals) / (100 Yew Logs) = 1 Coal per Log.
Question 2: You can kill 300 Hobgoblins in one hour. You can Fish 50 Lobsters in 30 minutes. Assume that these are your "best two Options". Find the opportunity cost of Hobgoblins and of Lobsters.
Answer: View Answer First, we need to know what we can do in one HOUR. We already know Hobgoblins are 300 per hour. However, you Fish 50 Lobsters in half an hour. This means that in a full hour you would catch 100. Now that we know that, the opportunity cost of killing Hobgoblins is (100 Lobsters) / (300 Hobgoblins), = 1/3 of a Lobster for every Hobgoblin we kill. The opportunity cost for Lobsters is (300 Hobgoblins) / (100 Lobsters) = three Hobgoblins for every Lobster we catch. In other words, we could have killed three Hobgoblins instead of catching that one Lobster.
Question 3: You decide to go to the movies. You pay $7 for the ticket. What's your opportunity cost?
Answer: View Answer There are two factors to your opportunity cost. The first factor is that you paid $7 for your ticket. You could have used this to buy something else, such as candy or baseball cards. We don't know what the "best" option was, but we know that $7 could have been used for other things. The other opportunity cost is the time spent at the movies. You could have spent this time studying for school or (more importantly) playing RuneScape!
Value Added Finally, now that you understand opportunity cost, you can apply it to decide to how to make Money more effectively. In order to finish our analysis, we need to understand one more concept: Value Added. This is rather simple actually. If you are given some Supplies for a certain price, and you make a new Product, the value added is however much the price increased. For Example, if you bought a Raw Lobster for 150 Gold Pieces, and a cooked Lobster is worth 200 Gold Pieces, and you decided to cook your Lobster, you added 50 Gold Pieces to the value of the Item. This is because the final Product (Cooked Lobster) is worth 50 Gold Pieces more than the Product you used up in the process (Raw Lobsters); the math is simply 200 Gold Pieces - 150 Gold Pieces = 50 Gold Pieces. Keep in mind that this can involve multiple Products. To make a Magic Longbow, you need a Magic Log and Bow String. If the Magic Log costs 1,000 Gold Pieces, and the String costs 100 Gold Pieces, then the total cost of the Products is 1,100 Gold Pieces. You could then sell that Longbow to someone for 2,000 Gold Pieces. The value added is 2,000 Gold Pieces - 1,100 Gold Pieces = 900 Gold Pieces... that is, the Product you created was worth 900 Gold Pieces more than the Products you used to make it. This is very similar to "profit", which I expect most People have learned. One last Example: You can buy a Steel Bar for 500 Gold Pieces and Smith it into a Dagger for 200 Gold Pieces. The value added on this Item is 200 Gold Pieces (final price) - 500 Gold Pieces (price of the Bar), or -300 Gold Pieces. That's right, not 300 Gold Pieces, but -300 Gold Pieces. In this case, you've actually decreased the value of the Item you were working with. This is just to point out that not ALL processes actually lead to value added. In the real world, businesses would rarely perform a process that makes a product lose value; however, in RuneScape, Experience is another major factor. As I said before, we are going to ignore Experience in this model (for simplicity), but this shows that some of the factors we ignore actually do have effects sometimes.
Now it's time to bring together everything we've learned in this section. First, we know that Essence sells for 25 Gold Pieces each. Second, we know that Nature Runes sell for 300 Gold Pieces each. However, remember that an Essence is used up (consumed) in the process of making one Nature Rune. That Essence COULD have been sold for 25 Gold Pieces. So, even though you've made 300 Gold Pieces per Item, you give up the opportunity to sell that Essence, so you've actually only earned 275 Gold Pieces. But wait! Isn't that just the value added of the Nature Rune? 300 Gold Pieces (the value of the final produce) minus 25 Gold Pieces (the Money you could have sold the Essence for) gives you 275 Gold Pieces each. What's the value added of Essence? Well, there are no inputs in the process of mining Essence, so the value added of Essence is simply 25 Gold Pieces (the price of the Essence) minus zero Gold Pieces (because there are no input costs).
So let's look at the Example of Mining Rune Essence for one hour in order to craft those Essence for two hours (this was Situation #1 in our first Example). For the first hour, you create 1,000 Essence, which have a value added of 25 Gold Pieces each. That's a value added of 25,000 Gold Pieces in one hour. Then, for the next two hours, you craft the Nature Runes. You craft 500 Nature Runes per hour, which have a value added of 275 Gold Pieces. This is a value added of 137,500 Gold Pieces in one hour. So, over the three hours, you're TOTAL value added is 25,000 Gold Pieces + 137,500 Gold Pieces + 137,500 Gold Pieces = 300,000 Gold Pieces. Notice that this is the amount of Money that we earned in situation #1. So the total value added is equal to the Money you earned. Let's do this again for situation #2. You spend no time mining Essence, but you spend all your time crafting Nature Runes. As we said before, the value added per hour is 137,500 Gold Pieces, and you do this for three hours. So you're total value added is 137,500 + 137,500 + 137,500 = 412,500 Gold Pieces (once again, this is the total Money we earned in situation #2).
So can you now see why situation #2 earns more than situation #1? Crafting Nature Runes has more value added per hour than mining Essence does. So if you spend time mining Essence, you are earning less Money in that hour than you could be if you were Crafting Nature Runes. So that BEST thing you can do is Mine NO Essence and spend your entire time Crafting Nature Runes. You should simply buy any Essence you need to Craft with. Once again, this is only because the value added of Nature Runes in one hour is greater than that of Essence. If you Mined Essence, you would earn 25,000 Gold Pieces. Remember, you COULD sell these if you chose to, so even if you end up Crafting them, you COULD have earned 25,000 Gold Pieces. So even if you Craft them, you're really creating 25,000 Gold Pieces worth the wealth when you mine the Essence, then using up that 25,000 Gold Pieces worth the wealth when you Craft the Nature Runes. If you Crafted Nature Runes, however, you would have earned 137,500 Gold Pieces, meaning that you would have generated 112,500 Gold Pieces MORE than you would have by mining Essence.
The Multiplying Effect of Opportunity Cost and Value Added: First of all, the "multiplying effect" is a term I simply made up to explain one of the effects of this situation, so do not assume that other People will know what it means if they haven't read this Guide. To explain the multiplying effect, let's continue with the previous example. By mining Essence for an hour, you earn 25,000 Gold Pieces. By crafting Nature Runes for an hour, you earn 137,500 Gold Pieces. However, if you wanted, you could use ALL of this cash to buy Essence. If you did that, you could afford 5,500 Essence. This was purchased from the cash that you earned in one hour, so in theory, you created this much Essence in one hour. If you had mined the Essence yourself, you would have only gotten 1,000 Essence. So the net result is that you get 5.5 times as much Essence as you originally would have had (5,500/1,000 = 5.5). This number, 5.5, is what I call the multiplying effect. It represents that, in one hour's work, you actually got the same result as if you had worked for 5.5 hours of mining Essence. If you're making the Item that has more value added per hour (like in this situation), the multiplying effect will be greater than one. If you get a number less than one, then it means that you're producing the Item that has less value added per hour.
This way of calculating the multiplying effect only works if you don't lose any Items when producing the second Item. In this case, you don't lose anything when producing Rune Essence, so it works. However, in most situations, it's easier to use the value added per hour. For Example, as said before, in this Example, Nature Runes have a value added per hour of 137,500 Gold Pieces, while Essence has a value added per hour of 25,000 Gold Pieces. The multiplying effect is better calculated by taking 137,500 Gold Pieces / 25,000 Gold Pieces = 5.5 That can pretty much be translated into "You earned the same cash making Nature Runes for one hour that you would have made mining Essence for 5.5 hours." Keeping in mind that you could then use this cash to buy more Rune Essence, you arrive to the same conclusions as in the paragraph: One hour of making Nature Runes can get you the same amount of Rune Essence as if you had mined Essence for 5.5 hours. The method shown in the previous example will only work if the second Item consumes no Items in the process; the method shown in this paragraph (using value added per hour) will always work.
Summary of Opportunity Cost: So what have we learned in this section? Opportunity cost represents what you give up when consuming or producing something (that is, what else you could have produced or consumed instead). There are two main resources to remember: Time and Money. When you are trying to earn Money by producing something, you only need to worry about time, as long as you subtract the costs of anything used up in the process from your final profit. That time could have been used to produce other things. When trying to produce the most Money possible, find the Item that gives you the most value added per hour, and you will make more Money. Of course, in practical situations, you may not know EXACTLY how many you will produce per hour; nor will you necessarily know EXACTLY how much you can sell each Item for. However, you should be able to reduce your Options to a few that seem to have higher value added per hour. In the next section, I'll explain why prices are what they are, how different events can effect the prices, and how you might be able to predict what will happen to the prices of some Items.
Test Your Understanding: Section 2
Situation: This situation will be used for all questions here. You can make 600 Bowstrings which are worth 100 Gold Pieces each. To make a Bowstring, you must buy Flax for 50 Gold Pieces each. You can chop 300 Yews per hour. Yews Logs require no other Items to obtain. You can sell Yew Logs for 300 Gold Pieces each. You can Craft 500 Chaos Runes per hour. Chaos Runes are worth 200 Gold Pieces each. Chaos Runes require Rune Essence in order to be made; Essence costs 25 Gold Pieces each. So the situation looks like this:
| Item Being Made | Value of Item Made | Number You can Make Per Hour | Item Required to Make | Cost of Item Required |
| Bowstrings | 100 Gold Pieces | 600 | Flax | 50 Gold Pieces |
| Yew Logs | 300 Gold Pieces | 300 | None | 0 Gold Pieces |
| Chaos Runes | 200 Gold Pieces | 500 | Rune Essence | 25 Gold Pieces |
Question 1: What is the opportunity cost of producing Yew Logs? Express the opportunity cost both by comparing it to Bowstrings and by comparing it to Chaos Runes.
Answer: View Answer The opportunity cost of producing Yew Logs (in terms of Bowstrings) is (600 Bowstrings) / (300 Yew Logs), or 2. That is, instead of producing one Yew Log, you could have produced two Bowstrings. In terms of Chaos Runes, you take (500 Chaos Runes) / (300 Yew Logs), or 1.67. That is, you could have produced 1.67 Chaos Runes instead of producing one Yew Log.
Question 2: What is the value added of each of these three Items?
Answer: View Answer Bowstrings are worth 100 Gold Pieces each, but you destroy a 50 Gold Piece, piece of Flax in the process, so the value added is 100 Gold Pieces - 50 Gold Pieces = 50 Gold Pieces. Yew Logs force no Items to be lost, so the value added of Yew Logs is 300 Gold Pieces - 0 Gold Pieces = 300 Gold Pieces. For Chaos Runes, the value added is 200 Gold Pieces - 25 Gold Pieces = 175 Gold Pieces.
Question 3: What is the value added PER HOUR of each of these Items? Which one should you produce and sell to earn the most Money?
Answer: View Answer The value added of Bowstrings was calculated to be 50 Gold Pieces each. You can produce 600 Bowstrings per hour, so the value added per hour is 50 X 600 = 30,000 Gold Pieces per hour. Repeating this with Yew Logs, we find the value added per hour is 300 X 300 = 90,000 Gold Pieces per hour. And repeating this with Chaos Runes, we get that the value added of Chaos Runes per hour 175 X 500 = 87,500. Because Yew Logs produce the largest value added per hour, that is the best thing to produce to earn the most Money.
Question 4: What is the multiplying effect of producing Yew Logs instead of Bowstrings? What does these numbers mean?
Answer: View Answer We discovered in Question 3 that Yew Logs have a value added per hour of 90,000 Gold Pieces and Bowstrings have a value added per hour of 30,000 Gold Pieces. That means that the multiplying effect is 90,000 Gold Pieces / 30,000 Gold Pieces = 3. This means that one hour producing Yew Logs produces the same effect as three hour producing Bowstrings.
This section will focus on understanding and making predictions related to prices. Many of you have probably learned a little bit about Supply & Demand. If the supply of an Item goes down, it's price will go up; if the demand for an Item goes down, it's price will go down. Well, this is true, and a very simple way of thinking about Supply & Demand. But there is MUCH more to the story. Using the information in this section, you should be able to predict which Items will sell well and how Item prices will change over time. Before we start analyzing Supply AND Demand, let's focus individually on Demand and Supply.
Demand: Simply put, demand is the number of an Item People are willing to purchase at a certain price. Let's think about the situation logically for a minute. If Dragon Bones are being sold for 2,500 Gold Pieces each, a certain number of People all across RuneScape will be willing to buy Bones at that price. If the price increases to 3,000 Gold Pieces, some of these People will want to buy less Dragon Bones, and some People will stop buying Dragon Bones all together. If the price were to instead decrease to 2,000 Gold Pieces, old buyers might buy more and there would be new People willing to buy Dragon Bones at that price. So as you increase the price of the Product, there will be a smaller number of that Product being bought. And if the price decreases, there will be a larger number of that Product being bought.
All of these possible price/quantity combinations can be expressed on something called a demand curve. Simply put, a demand curve is an equation that represents the relation between price and quantity. To simplify the analysis, we generally use a line to represent a demand curve. Most demand curves are probably not straight lines, but using a lines does nothing to hurt our understanding of a demand curve; plus, lines are easier to work with.
VERY IMPORTANT: Demand curves ONLY represent what People are WILLING to buy at a certain price. It has nothing to do with what People are willing to sell at that price. We will add the supply of the Item into the situation later.
An Example of an equation for a demand curve might be Q = 10 - 2P, where Q is the amount of that Item that People want to buy and P is the price. For those who have never worked with lines before this Guide, this may not look like the y = mx + b formula that I said was a line. However, it is. In this case, b = 10 and m = (-2). The m on a demand curve will always be negative. If it were positive, that would imply that People would want to buy MORE of the Item as the price went up; and for almost any Item, we know this isn't true. So let's use this equation for a few Examples. If the price of P = 1, then the quantity that People would want to buy would be Q = 10 - 2 X 1 = 8. If the price of P = 2, then Q = 10 - 2 X 2 = 6. You could continue this over and over, just like we did in the line example in the introduction.
It's often more useful to look at a graph of the line. If we were to graph the line, it would look something like this.
You'll notice that P is actually on the vertical (up-and-down) axis. By the way the equation is set up, you would expect Q to be on the vertical axis. Sadly, this is simply the way the graphs were set up originally, and with all the information that has been compiled based on the way the graph is, it's likely never to be changed. If you know Algebra, you can get P alone and then it will look normal; if you can't, you'll just have to deal with it (though it's really not all too bad).
Now is a good point to specify the difference between demand and quantity demanded. Demand is the equation that I just told you and the line that was graphed. It is a representation of the quantity People would demand at every price. Thus, demand is never a single number; it's always an equation, a graph, or something like that. Quantity demanded, on the other hand, is the number of Items People would want at a SPECIFIC price. Thus, quantity demanded is a single number. Whenever you replace P with a number in the demand equation, the result you get for Q is the quantity demanded at that price. So, in this example, the demand is Q = 10 - 2P. That doesn't change in this situation. However, if I say that the price is set at P = 2, then the QUANTITY demanded is 6. If I then said that the priced was changed so that P = 1, then the QUANTITY demanded would be 8. Both of these were obtained by replacing P with some number in the equation for the demand. Make sure you understand the difference between the two, or else you might get confused in the next portion. To make it more clear throughout the Guide, I will try to call demand a "demand curve" and I'll try to call quantity demanded something like "the number demanded" or maybe still just "quantity demanded".
Shifting the Demand Curve: The demand curve only relates price and quantity; but what affects the curve itself? Well, it turns out there are a lot of factors that can cause the demand curve to shift (move). Generally, when People begin to want to use the Item less, it will shift left; when People begin to want the Item more, it will shift right (you can also think of it shifting down or up). I will now give a few Examples as to why this might happen. These will demonstrate some common reasons, but when a situation arises, you'll often have to use Logic to figure out which way the curve will shift; but after these next few paragraphs, it should be rather easy to figure it out.
Shifting the Demand Curve Right: Let's use the Market for Dragon Bones in our Example. Recently, Jagex released new Prayers. This would cause more People to want to train Prayer. If more People need Prayer, then there will be more People trying to buy Dragon Bones. You can assume that at any given price, there will be MORE People demanding Bones. The graph below shows an Example of this. D1 is the original demand curve.
D2 is the demand curve after Jagex released these new Prayers. Let's say that, before the Prayers were released, at a price of 2,500 Gold Pieces each, the quantity demanded of Bones was Q = 50 (I should note here that Q = 50 does not necessarily mean 50 Bones; it could mean 5,000 Bones, 50,000 Bones, 50,000,000 Bones, etc.). After Jagex released the Prayers, more People wanted to train Prayer. As a result, at a price of 2,500 Gold Pieces each, the quantity demanded now became Q = 80, because more People are looking to buy Dragon Bones. If you repeat this for every possible price, you'll see that the ENTIRE demand curve shifts to the right. The brown arrows represent this shift as more People want to buy the Dragon Bones at any particular price. The length of the arrow pretty much represents HOW MANY more Bones are now being demanded at each price. They also show the direction of the shift.
More People wanting to train Prayer is probably the most common example of a reason you'd see a higher demand for Dragon Bones. However, there are others. Many People noticed that, around the time that Whips were just starting to be sold, Dragon Bone sales spiked high. Why is that? Well, first of all, remember that the main buyers of Dragon Bones tend to be higher Levels. Many of these higher Levels set off for 85 Slayer when the Skill was released; and the higher Levels were the first to get there because they can kill Monsters faster. These High-Level, 85 Slayers sold many Whips for tens of millions apiece. This increased their income very greatly. With more income to spend, they were looking to buy more things. One of the things they bought a lot of were Dragon Bones. With more Money to spend, they wanted to buy more Dragon Bones. And even though there were only 100 or so Level 85 Slayers at the time, they were buying tens of thousands of Dragon Bones; this was able to shift the demand curve to the right. However, over time, they bought all the Dragon Bones they needed, so the original Level 85 Slayers didn't want to buy any more. The price of Whips dropped significantly, so the new Level 85 Slayers didn't have nearly as much income to buy Dragon Bones as the old ones did. As a result, demand shifted back to its original spot. This is a good example of how economics can be used to make predictions in RuneScape. If you knew that it was the high price of Whips that was fueling the Dragon Bone craze, and you also knew that Whips would drop in price over time, then you could have figured out that demand would shift back to the left eventually.
Shifting the Demand Curve to the Left: Just as the demand curve can shift to the right, it can also shift to the left. After the previous explanation, I think you can figure out what causes a demand curve to shift to the left. As LESS People want to buy an Item at a specific price, then the demand curve will shift left. Here's an Example of what might cause this. A while ago, Jagex released Zogre Bones. Zogre Bones gave substantial Prayer Experience; Ourg Bones (one kind of Zogre Bone) actually gave about twice the Experience that Dragon Bones did. Unfortunately, Ourg Bones were much too hard to get so few People bothered getting them. However, for this Example, let us assume that Ourg Bones WEREN'T very difficult to get. Well, now, anyone who is training Prayer has a choice between Ourg Bones and Dragon Bones.
Many of the old buyers of Dragon Bones might switch to buying Ourg Bones instead. This is known as a substitute; if you can use one Item instead of the other, it is a substitute. That doesn't mean the Items have to be exactly equal. For Example, if you're training Smithing Experience, two Bronze Bars are a substitute for one Iron bar (because two Bronze Bars will give the same Experience as one Iron bar). Thus, if you were training Smithing, you could use either Bronze Bars or Iron Bars to train. Now, back to the Dragon Bones example. Ourg Bones become a substitute for Dragon Bones. As a result, some of the People who used to buy Dragon Bones will start buying Ourg Bones instead. This means that at any given price, there will be LESS People buying Dragon Bones than before. This causes to demand curve to shift left. In the graph below, D1 is the original demand curve. D3 is the new demand curve after Ourg Bones come out. Notice how the entire curve moves to the left, similar to how the entire curve moved right when demand increased. At a price of 2,500 Gold Pieces, for D1, the quantity demand was Q = 50; but after the Ourg Bones were released, for D3, the quantity demanded changed to only Q = 30.
Question 1: The demand curve is given by Q = 20 - 2P. What are the quantities demanded when P = 1, P = 5, and P = 10.
Answer: View Answer For P = 1, you replace P with 1 and calculate Q = 20 - 2 X 1 = 18. Repeating this for the next two, when P = 5, Q = 10. When P = 10, Q = 0. In other words, when P = 10, no one will want to buy the Item.
Question 2: Scientists announce that oranges are even better for your health than anyone knew before. Which way will the demand curve for oranges shift?
Answer: View Answer We can assume that this announcement will make more People want to buy oranges. Thus, the demand curve shifts right.
Question 3: Jagex changes High-Level Alchemy (a Spell that uses Nature Runes) so that it only gives half the Money it used to give. How will this affect the demand curve for Nature Runes?
Answer: View Answer The main use of Nature Runes is for High-Level Alchemy. If High-Level Alchemy gives less cash back, then less People will want to do it. If less People are doing High-Level Alchemy, then less People will be using Nature Runes. And if less Nature Runes are being used, then less Nature Runes will be bought. Because less Nature Runes are demanded, the demand curve shifts left.
Supply: Supply is the other part of the Supply & Demand (I hope you could have guessed that). Supply is actually fairly similar to demand, so I can explain it a little faster. Supply is the amount that People would sell of an Item at a given price. An example of supply might be Q = 4 + 3P. Notice that supply actually uses the same variables as demand. For those of you who know what slope is, notice that the slope is positive; just like demand slopes are always negative, supply slopes are always positive. This means that the supply line will always go from bottom-left to top-right on a graph. And this makes sense. With the line going from bottom-left to top-right, that means that if you increase the price of an Item, People will sell more of it. And this is how things tend to work. If Players are buying Iron Ore for 100 Gold Pieces each, a certain number of People will sell Iron Ore; but if Players start buying Iron Ore for 200 Gold Pieces each, then MORE Iron Ore will be sold. Note that supply and quantity supplied are two distinct terms; supply is the equation (or line) that represents the amount of an Item that People would sell (Q) at a certain price (P). Quantity supplied is the NUMBER of that Item that would be sold at a certain price.
Shifting the Supply Curve The supply curve shifts in the same way that demand curve can shift. When the supply of an Item increases, it shifts right (or down); when the supply decreases, it shifts left (or up). The up/down shifts seem the opposite of what they should be, but if you move the curve left (decreasing), you'll notice that it's actually shifting up. This can seem a little odd, so I recommend only shifting your curve left and right. Shifting the curve right means that more People are willing to sell an Item at a given price. Shifting the supply curve left means less People are willing to sell the Item at a given price.
So what kinds of things can shift the supply curve? Anything that affects obtaining the Item ON THE SELLER'S END. Remember, the demand curve represents the buyer's end of things, and the supply curve represents the sellers end. A while ago, Jagex added more Green Dragons to the Game in lower Level Wilderness. How did this affect the supply curve? Well, with more Dragons, Dragons Bones became easier to obtain because there were more to kill. Furthermore, because they are in an easier location to reach (as well as a safer location), this also allows People to get more Bones. Thus, more Bones are willing to be sold at the same price. This means the supply curve shifts right.
Now let's say that Jagex decided Dragons were too easy to kill, so they made Dragons stronger. How would this affect the supply curve? Well, with Dragons becoming stronger, they become harder to kill. This might mean that some People who used to kill Dragons are now too weak to kill them. Furthermore, those ho still continue to kill Dragons will find that it takes longer to kill one Dragon. This means that, at any given price, People will be getting less Dragon Bones to sell. This will shift the supply curve left.
Supply and Demand, Together Okay, here's where this all starts to pull together. Supply and Demand become useful when plotted on them same graph. If you plot both the supply curve and the demand curve on the same graph, then at the point they cross, this is where the Market will price its Product. Let's use a simple example to explain it better. The demand curve is given by Qd = 11 - 2P. The supply curve is given by Qs = 1 + 3P. From here on in the Guide, I’ll use Qd for quantity demanded and Qs for quantity supplied so that we you do not confuse one for the other. Notice that the price is the same variable for both curves. The Market will reach its final price when Qd = Qs. Why this is so will be explained in a minute. However, on the graph, you should notice that this is the intersection of the two graphs. At this point, the quantity demanded and supplied are both the same (7), and the price is the same (2). And this makes sense. You would hope that in a balanced economy, there are the same amount of People buying the Product as there are selling the Product. If you put P = 2 into both the supply and demand equation, you'll notice that Qd = 7 and Qs = 7. This intersection point is known as the "equilibrium point"; the price at this point is known as the "equilibrium price"; and the quantity at this point is known as the "equilibrium quantity".
I'm sure some of you are thinking "No way, how could he possibly say that the Market will always settle at this intersection point? It's not like the Market can think. It's made of a bunch of greedy buyers/sellers, and they want to make the most Money possible, so they wouldn't settle at a lower price." Well, that statement is sort of right; 1) The Market can't think. 2) You might be able to say that the Market is made of a bunch of greedy buyers and sellers. But this is actually a good thing! It's the idea that People want to earn the most Money possible or spend the least Money possible that causes the Market to end at the equilibrium price.
Let's take the last two equations as an Example. Let's say that the Market set the price at P = 3 (instead of 2). This means that the price is above the equilibrium price. What would the quantity supplied and demanded be? Well, Qd = 11 - 2 X 3 = 5. Qs = 1 + 3 X 3 = 10. So Qd = 5 but Qs = 10. There are more People producing the Item than there are People willing to buy the Product. This is known as a "Surplus". A surplus is when you have more of something than you need. Here, the surplus is Qs - Qd, or 10 - 5 = 5. So there's a surplus of 5. Some sellers might be able to sell their Product, but many wouldn't. If they don't sell it, they get absolutely NO Money, so they'll lower their price a little to have the best price so that People will buy their Product. When the price is lowered, less People are willing to produce more and more People are willing to buy the Item (this is what we discussed in the sections "Demand" and "Supply"). When this happens, the surplus shrinks. This continues until, eventually, there are exactly as many of the Item being sold as there are People willing to buy them. If this didn't happen, then People would continuously be producing the Item but never selling them, because not enough people would be willing to buy at that price." (you can see part of it in the paragraph that's currently in the guide, then it immediately runs into P=1).
Let's take the last two equations as an Example. Let's say that the Market set the price at P = 3 (instead of 2). This means that the price is above the equilibrium price. What would the quantity supplied and demanded be? Well, Qd = 11 - 2 X 3 = 5. Qs = 1 + 3 X 3 = 10. So Qd = 5 but Qs = 10. There are more People producing the Item than there are People willing to buy the Product. This is known as a "Surplus". A surplus is when you have more of something than you need. Here, the surplus is Qs - Qd, or 10 - 5 = 5. So there's a surplus of 5. Some sellers might be able to sell their Product, but many wouldn't. If they don't sell it, they get absolutely NO Money, so they'll lower their price a little to have the best price so that People will buy their Product. When the price is lowered, less People are willing to produce more and more People are willing to buy the Item (this is what we discussed in the sections "Demand" and "Supply"). When this happens, the surplus shrinks. This continues until, eventually, there are exactly as many of the Item being sold as there are People willing to buy them. If this didn't happen, then People would continuously be producing the Item but never selling them, because s, let's say that P = 1. In this case, there are less of the Item being supplied than People want to buy. When there aren't enough Items to sell to everyone who wants one, it is known as a deficit. Here, the deficit = d - Qs, or 9 - 4 = 5. So there is a deficit of 5. This means that, while some buyers will be able to find sellers, many buyers will not be able to find one. Those. who are willing to pay more will offer a little bit more, so that sellers will sell to them first. As we learned before, as the price increases, Qd decreases and Qs increases. Thus, the deficit shrinks. This continues until there are the same number of buyers and sellers. As you can see, this is a pretty similar argument to what happens when the price is too high.
So as you can see, the prices of Items aren't simply randomly generated. There is some logic behind it. Of course, if Dragon Bones cost 2,500 Gold Pieces each, no one is going to care if it's 2,490 Gold Pieces or 2,510 Gold Pieces; but you will see significant changes if they drop to 2,200 Gold Pieces or 2,800 Gold Pieces. Or when you wonder why some items cost so much, it's either because there aren't many suppliers or there's a high demand (or both). As a result, the equilibrium has a high price. These sellers COULD sell for less, but there's no reason for them to do so; there are plenty of People who will buy at that price. It's not greed, it's simply the obvious thing to do. If the price is "too high", then they wouldn't be able to sell their Products. If they were the only one selling that high, then People would just buy from someone else. If everyone was selling at that price and it was too high, there wouldn't be enough buyers; so the sellers would either be forced to lower their prices or not sell the Item. Also, keep in mind that the Shops in RuneScape do not determine the prices of most Items. This is because buyers are usually willing to pay more than the General Store would. There's actually some interesting observations that could be made by comparing the market prices to the General Stores, but unfortunately, this Guide is already too long. And I still have one more important topic to cover related to Supply and Demand.
Changes in Equilibrium: So you see how, when you have a supply curve and a demand curve, you can predict what the price of the item will be and how many will be sold (though I expect you probably care about the price more, quantity is also important). But we know that prices change in RuneScape. What causes this to happen. Well, remember that before I showed you how the supply and demand curves can move, and what can cause them to move.
| Curve Being Moved | Direction | What happens to equilibrium price? | What happens to equilibrium quantity? |
| Demand | right | increases | increases |
| Demand | left | decreases | decreases |
| Supply | right | decreases | increases |
| Demand | left | increases | decreases |
Things can be a little more complicated than one simple shift. For example, let's go back to the Dragon Bones example. Let's say that two events happen at the same time. First, Jagex increases the number of Dragons in the Game. Second, new Prayers come out. What will happen to the equilibrium price and quantity of Dragon Bones? We must analyze BOTH of the shifts that take place. First, Jagex increases the number of Dragons. Well, you should know by now that this will increase the supply of Dragon Bones, shifting the supply curve to the right. If we look at the table, we see that price decreases and the quantity increases. Next, let's look at the second factor: New Prayers are released. Hopefully, you'll remember that the new Prayer means more People training Prayer; and more People training Prayer means more People want Dragon Bones. This means that the demand curve should shift right because there are more buyers. Looking at the table, when demand shifts right, then price increases one increase in quantity; because both factors increase the quantity, the final equilibrium quantity will also increase. Now let's look at price. The first factor decreases the price; the second factor increases the price. Without information, we cannot determine what the new price is. It depends HOW MUCH that each factor changes the price. So the quantity will increase but the new price is unknown.
I'd like to conclude this portion with an example that many People might be wondering about; why Party Hats are SO expensive. Party Hats are unique in that they have a fixed supply; no matter HOW MUCH you increase the price of Party Hats, you cannot produce any more. So the supply curve might look something like Qs = 90. However, remember that there are six different colors of Party Hats. Let's assume that every Party Hat is a completely different Item, and that there's equal amounts of each. This means that the supply of a SPECIFIC Party Hat Color is Qs = 15. However, the demand for Party Hats is just like any other demand; let's say Qd = 300 - 10P. However, at the equilibrium point, Qd = Qs, and because Qs can never change, this equation is really 15 = 300 - 10P. If you knew algebra, you could solve this. However, more importantly, the supply curve can never shift right. So every time the demand increases, the price must increase significantly to get rid of the deficit, because you can never increase the supply. The graph below shows the situation. The red line represents the fixed supply; each of the blue lines represent a different demand curve as demand increases.
Now, let's apply what we've learned throughout the Guide to decide what kinds of Skills will give you good cash. First of all, you would want to produce an Item with a small supply curve. Now, you can't simply walk up to a Skill and see its supply curve, but you can predict what the supply curve would look like if you know a little bit about the Skill. How many People are willing to do this? How easy is this to do? Are there many Level requirements? Are there Quest requirements? Are the Level requirements high? Do most People even know how to do this? By now, if you knew the answers to these questions, you should be able to predict how each one would affect the supply curve. You also want an Item with high demand. Does this Item do something good? If it does, People will want it more. Is this Item re-usable? That is, can you use this Item more than once? Items that you can use over and over (like a Whip) might start at a high demand, but that demand will quickly decrease as everyone who wants one buys one. However, Items that cannot be used many times (like food or Rune Essence) might have a little lower demand, that demand won't decrease as quickly (or may not even decrease at all). Keep factors like these in mind when trying to determine how much an Item could sell for.
Once you know the price, include your knowledge of opportunity cost and value added. What else could you be spending your time doing? Is there a high value added on the Item? How many can you make an hour? This is why I included BOTH of these sections in the Guide. You must combine your knowledge of both supply/demand and opportunity cost/value added to decide what Items will earn you Money the fastest. I cannot TELL you because it varies from person to person, mainly because of your Levels. But by now you shouldn't need my help any more; you've learned the two most important tools in economics. Go use them.
Test Your Understanding: Supply and Demand
Question 1: The supply curve for Dragon Legs is given by Qs = 10 + P. The demand curve is given by Qd = 22 - 2P.
What are the quantities supplied and demanded at P = 1, P = 3, and P = 4, and P = 6.
Answer: View Answer Q s = 10 + 1 = 11 at P = 1. At P = 1, Q d = 22 - 2 X 1 = 20. Repeating this over and over, we get:
| Price | Qs | Qd |
|---|
| 1 | 11 | 20 |
| 3 | 13 | 16 |
| 4 | 14 | 14 |
| 6 | 16 | 10 |
Question 2: What is the equilibrium price and quantity? (HINT: Use the answers from Question 1)
Answer: View Answer At P = 4, you'll notice that Qs = 14 and Qd = 14. Therefore, the equilibrium price is P = 4 and the equilibrium quantity is Q = 14.
Question 3: For those who do not know, Dragon Legs come from Metal Dragons. Almost all People who use Melee to fight Metal Dragons use both Anti-Fire Potions and Prayer Potions to do so. Let's assume that the price of Herbs goes up, which in turn makes the price of all Potions to increase. At the same time, a full new set of Armor is released, and all of these pieces are better than Dragon pieces. What will happen to the equilibrium price and quantity of Dragon Legs?
Answer: View Answer There are two factors here. Deal with the first situation first. When the price of Potions increases, it will cost People more Money to fight Metal Dragons. That means at any given price, there will be less People who want to sell Dragon Legs (because they're now making less of a profit). This will shift the supply curve left. By doing so, the equilibrium price increases and quantity decreases. Now for the second condition. The new Armor likely has Legs that will serve as a substitute for Dragon Legs. As we saw before, this substitute should decrease demand for Dragon Legs (because many People looking to buy Dragon Legs will now buy the new Armor's Legs instead), shifting the demand curve left. This shift decreases the equilibrium price and quantity. Both factors cause equilibrium quantity to decrease, so the final equilibrium quantity will have decreased, as well. However, the first factor causes the price to increase while the second factor causes the price to decrease. We cannot tell the final quantity without further information.
I hope you enjoyed this Guide. And more importantly, I hope you learned something. I hope you can apply it to RuneScape and you'll start earning Money more effectively gaining many Levels, I hope you understand the economy in real life a little bit now because of it. I hope you'll pass on this information to other People, whether you tell them about it yourself or simply tell them to read this Guide. Of course, hoping does nothing. You have to take action to get things accomplished. You don't get rich through luck (unless you win the lottery); and there's no lottery in RuneScape, so you'll have to do it yourself. Seize the chance to earn Money. Knowledge is power.
Yes, I already have some FAQ. I know this Guide just came out, but remember that I have explained this to People in the past. I've heard a few good questions, including one that someone asked when I said I was writing this Guide, so I'll include them here.
Q: That doesn't sound like any fun. I don't want to spend all my time earning Money. How could you want to?
A: I'm not suggesting that you spend your time earning Money. However, you wanted to know how to make Money better. This is how you do it. I'm not saying you shouldn't have any fun. This is just a Game, it's not supposed to be "work". However, sometimes, you need to earn a lot of Money fast, and using these concepts will help you find the fastest way.
Q: Why would you want to tell People about this? Wouldn't that give you less of an advantage?
A: Well, yes, it might hurt me a little bit. If a lot of People know how to do this stuff, then the Market will become more competitive. But I don't care. I like People having the most information possible. There seems to be many People in RuneScape willing to give advice; I am saddened that unfortunately much of that information is incorrect. Knowledge is power. I didn't know this stuff until someone taught it to me (I was taught in the classroom, but still, I was taught). People won't figure it out on their own. I want to give them the chance to learn it; if someone is willing to learn, I'm willing to teach.
Q: You seem to know how to make Money. Can't you just give me some?
A: NO! There are plenty of opportunities in this Game to earn Money. This Guide tells you which ones are better for YOU. Get some Skill that not as many People can do and where People want the Items. (If you don't know any, you can check out our Money Making Guide) to pick up some basics. Remember, any Money I have came from me earning it; I didn't suddenly wake up one day and have it. No one did. Besides, it's not like you need to buy stuff to survive in this Game; it's not like real life where you can starve or freeze to death. The information I have shared within this Guide is the same for real life. Apply it!
Q: Ah! I can't sell my Item and the price is dropping. What should I do?
A: You have two Options. If you think the Item's value will start increasing again, hold onto it. If you think the value will keep dropping (which, if it's dropping now, it probably won't stop), undercut everyone by 10% or so (enough so that you're clearly the cheapest but not losing TOO much of the price). At the lower price, hopefully, someone will buy yours quickly before the Market price gets even lower causing you to lose even more.
Q: But Nature Runes aren't actually 300 Gold Pieces each. So you're answer isn't right.
A: First of all, that wasn't a question but a statement. Second of all, you're partially correct. If the price of Nature Runes changes, then the value added of Nature Runes would change, of course. However, the numbers themselves don't change the way which we came to our conclusion. So all you do is repeat the method using the new cost of Nature Runes, and you'll come up with the new, correct answer.
Q: Were those equations really the demand and supply equations for those Items?
A: No, as I said before, it's very difficult to determine a demand and supply curve. There actually are methods to determining these curves, but they're somewhat difficult (demand curves can be very difficult). Also, supply and demand curves are unlikely to be a straight line (the way they're drawn implies that only 20 People would want the Item if it were free... but chances are everyone would want it). However, like I said, I simplified the problem so it would be easy to look at. It's not the curve itself that matters; it's the method we used to analyze the curve. So you won't be literally looking at the real demand curve when you're trying to decide what prices Dragon Bones will be in 3 months. However, you should be able to analyze the curve, understanding how new events in the Game will affect it. That's what is important to understand out of this.
Q: I would like to make graphs myself, which program do you guys prefer?
A: We are having good experiences with Graphmatica, you can download it from the link.
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