>>13530155>IncorrectCorrect, see Carl Menger, 1871
>demand has nothing to do with how much the normal price of a product is. It does you illiterate fucktard. If nobody wants to purchase a product at any price, then demand for that product is zero and there is no sale. The price of the product is zero. For instance, a leaf from a tree, has a price of zero. A tangerine from the same tree has an actual price, because people demand it. Yet the effort in obtaining either leaf or tangerine (plucking it from the tree) is the same.
>A customer may only wish to pay 500 for the product but the product will never sell for 500 because the product costs 1000 to make In that case the producer exits the market because he won't produce at a loss.
>So demand in this direction is irrelevantNo, it's relevant, the price the market is willing to pay is 500, but the supply and demand lines in this case don't intersect, because supply at that price is zero (nobody wants to produce at a loss), thus there are no sales.
>Unless there is a rare circumstance where supply cannot be met, the product will cost slightly higher than 1000 because of profit but not 2000 because competitors in the market will keep undercutting each under until the price asymptotically approaches the labor cost to produce You are describing supply and demand, except the labor cost is absolutely irrelevant in the equation. In perfect competition, producers will indeed undercut each other until reaching the point of maximum benefit which equals the equilibrium price, that is the price at which the most sales will happen.
>Why would a producer produce more product than is demandedWhat would happen in that example is that the producer would keep lowering prices until someone buys from him.
If he can't sell for a price higher than the cost of production, he exists the market or produces something else
A child could grasp the supply and demand model
https://www.youtube.com/watch?v=PNtKXWNKGN8 
