SanDisk Nand price should be at least +180% up over the next 12 months as minimum. Based on the Elasticity function to solve Demand & Supply
# ### 1. Core Concept: Market Equilibrium
Prices in a market change whenever there is a mismatch between what buyers want (\*\*Demand\*\*) and what sellers can provide (\*\*Supply\*\*).
Normally, when demand outpaces supply, the price rises. This price increase does two things to restore equilibrium:
\* It encourages suppliers to produce a bit more.
\* It discourages some buyers, causing demand to fall back down.
How drastically demand drops when prices rise is measured by the \*\*Price Elasticity of Demand (e)\*\*:
\> \*\*Formula:\*\* \`Elasticity (e) = % Change in Quantity Demanded / % Change in Price\`
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\### Scenario A: Elasticity = 0 (Perfectly Inelastic)
\*\*What it means intuitively:\*\*
An elasticity of \`0\` means buyers are completely insensitive to price changes. No matter how high the price goes, buyers will attempt to purchase the exact same quantity (e.g., life-saving medications like insulin).
\*\*The Problem:\*\*
\* \*\*Demand Increase:\*\* +200%
\* \*\*Supply Increase:\*\* +20%
\* \*\*Net Shortage (Unmet Demand):\*\* +180%
To restore balance, price must rise enough to erase that 180% excess demand.
Using the formula: \`% Change in Quantity = e \* % Change in Price\`
Since \`e = 0\`:
\> \`% Change in Quantity = 0 \* % Change in Price = 0%\`
No matter how high the price goes, demand \*\*never\*\* drops.
\*\*Mathematical Result: Infinity (∞)\*\*
Because demand never falls, the demand curve is a vertical line. It will never intersect the new supply curve at a finite price point.
\> \`% Price Change = Net Demand Shift / |e| = 180% / 0 --> INFINITY (∞)\`
\*\*Real-World Boundaries:\*\*
In reality, prices don't reach infinity because:
1. \*\*Budget Constraints:\*\* People literally run out of money.
2. \*\*Price Controls / Rationing:\*\* Governments step in during extreme shortages.
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\### Scenario B: Elasticity = -1 (Unitary Elasticity)
\*\*What it means intuitively:\*\*
An elasticity of \`-1\` means a 1% increase in price results in an exact 1% decrease in quantity demanded.
\*\*The Calculation:\*\*
1. \*\*Net Excess Demand:\*\* \`200% - 20% = 180%\`
2. \*\*Required Price Increase:\*\* \* \`|e| = 1 = 180% / (% Change in Price)\` \* \`% Price Increase = 180% / 1 = +180%\`
\*\*The Result:\*\*
A \*\*180% price increase\*\* reduces demand by exactly 180%, clearing the market.
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# Summary Comparison
|**Metric**|**Scenario A (ϵ=0)**|**Scenario B (ϵ=−1)**|
|:-|:-|:-|
||
|**Demand Curve Shape**|Vertical line|Downward sloping curve|
|**Buyer Behavior**|Buy at any cost|Buy less as prices rise|
|**Excess Demand**|$+180%$|$+180%$|
|**Market Clearing Price**|**$\\infty$ (Theoretical limit)**|**$+180%$**|