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All the law of supply and demand says is that the market will reach an equilibrium where the quantity demanded equals the quantity supplied, and that such quant
by lottin 2y ago
All the law of supply and demand says is that the market will reach an equilibrium where the quantity demanded equals the quantity supplied, and that such quantities as well as the equilibrium price are determined jointly by supply and demand. It doesn't say that the demand and supply curves are unmovable or that they have a particular slope.
- kubb 2y agoIn this form, the law can’t be used to draw relevant conclusions about urban planning. It’s also demonstrably false, as the demand and supply never perfectly match.
- sieabahlpark 2y ago[dead]
- lottin 2y agoThe immediate conclusion is that if there's an excess demand prices will go up in order to reach a new equilibrium. And this exactly what seems to be happening in the housing market.
- toyg 2y agoPrice equilibrium is a myth, in practice it's never observed. The reality is inflation, because the greed of man is unbound.
- appreciatorBus 2y agoIf greed of man is unbound, how come computers, TV's and airplane tickets are so much cheaper than decades previously? The idea that people involved in housing are some how uniquely greedy has a long history and it's just wrong. People who own housing - homeowners & landowners - are able to be more greedy than others because they are part of a cartel. The debate over housing reform & housing supply is about whether or not enforcing that cartel should be a government function.
- freefaler 2y ago> It’s also demonstrably false, as the demand and supply never perfectly match. Can you expand on that claim?
- whatshisface 2y agoSupply and demand are defined as the willingness and ability to transact at each price. People who want something but who aren't willing or able to buy it at a given price are the cause of the supply curve. The marketplace is full, at any time, of people who would buy or sell if the price was right. That's why they're curves and not points. Here is a free textbook that requires no more than highschool math: https://openstax.org/books/principles-economics-3e/pages/3-introduction-to-demand-and-supply https://openstax.org/books/principles-economics-3e/pages/3-i...
- dalmo3 2y agoBy definition, supply and demand perfectly match whenever money changes hands.
- PaulDavisThe1st 2y agoThat's not what "supply" or "demand" means and I suspect you know this. The "law of supply and demand" is a statement about aggregate, not individual behavior. "supply satifies demand" is not a statement about an inidividual transaction in which a person's desires/needs/wants were satisfied, it is about the aggregate behavior within an economy.
- dalmo3 2y agoThe statement about the aggregate is meaningless without the materialised, individual transactions, because those are what determine the price. I think of it as an order book where supply is the ask and demand is the bid. You can only argue that supply never meets demand if there's no liquidity, but that doesn't refute the "law".
- PaulDavisThe1st 2y agoThe forest and the trees are not the same thing.