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> So, demand for lamb spikes around Easter every year. But, lamb prices actually drop around Easter (at least for consumers) So, you don't think everyone invol

by nanis 4y ago

> So, demand for lamb spikes around Easter every year. But, lamb prices actually drop around Easter (at least for consumers) So, you don't think everyone involved in the chain of getting that lamb to you, anticipating the shift in the demand curve that occurs very predictably, don't ensure that they have the highest possible supply during that time? You forgot the "keeping everything else constant" and changes in quantity demanded in response to just the price of the good versus changes in the shape and location of the market demand and supply curves.

tsimionescu 4y ago
Of course supply is adapted to anticipate this well known change in demand. But the driver for all of these is a culinary tradition causing a spike in demand*, it's not the other way around. Either way, my only point is that since markets have special characteristics that make them unintuitive from a basic supply-demand analysis. Too many people assume the most basic models of basic economics are enough, and ignore things like supply and demand elasticity, and the fact that supply or demand may be constrained by non-economic factors. I also tend to think the laws of supply and demand are useful as a descriptive model, but lack predictive power for many goods, since the factors above can't be estimated in blind - you have to actually see what people happen to do, and then come up with a model for elasticity to make the supply-demand curves fit the actual observations, you can't do it the other way around. *To be fair, it may well be that the original tradition was caused by a natural change in supply, with sheep giving birth at the beginning of spring, so having edible lamb by mid spring when Easter (and the pre-Christian celebrations it replaced) haken; but even then, that was not an economic change, it was a biological reality.

by nanis 4y ago

tsimionescu 4y ago

Of course supply is adapted to anticipate this well known change in demand. But the driver for all of these is a culinary tradition causing a spike in demand*, it's not the other way around. Either way, my only point is that since markets have special characteristics that make them unintuitive from a basic supply-demand analysis. Too many people assume the most basic models of basic economics are enough, and ignore things like supply and demand elasticity, and the fact that supply or demand may be constrained by non-economic factors. I also tend to think the laws of supply and demand are useful as a descriptive model, but lack predictive power for many goods, since the factors above can't be estimated in blind - you have to actually see what people happen to do, and then come up with a model for elasticity to make the supply-demand curves fit the actual observations, you can't do it the other way around. *To be fair, it may well be that the original tradition was caused by a natural change in supply, with sheep giving birth at the beginning of spring, so having edible lamb by mid spring when Easter (and the pre-Christian celebrations it replaced) haken; but even then, that was not an economic change, it was a biological reality.