Why We Call It a Cobweb

Animation 3. A Stable Cobweb Process

In the animation above we see how the price and quantity fluctuate from year to year, alternating high prices and low production with high production and low prices. We see that the pattern grows to look (a little) like a cobweb -- thus the term, "cobweb cycle."

We also notice that, in this case, the price and quantity spiral toward the equilibrium of supply and demand. In other words, the "cobweb process" in this case is stable -- prices and quantities go toward equilibrium, even if it is indirect and takes a long time.

But that isn't necessarily so.

An Unstable Cobweb Process