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To: Behind Liberal Lines
supply and demand are actually interrelated.

Again, your assumptions are killing you.

The assumption in supply demand analysis is that "other things remain equal," and they don't -- perfect correlation between "variables" is possible only in the presence of a physical law.

16 posted on 04/09/2002 9:45:18 AM PDT by thinktwice
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To: thinktwice
It's my understanding that:

Supply & demand are interrelated and should only be analyzed separately in an academic context.

Furthermore, supply and demand meet at a place called equilibrium.

This is where Adam Smith believed that a free market would tend to arrive if left alone. Market forces are pushing supply and demand into this position. Every time prices stray from the equilibrium point, the laws of supply and demand draw it back. If prices rise above equilibrium, a surplus will occur and prices will fall, increasing demand and eliminating the surplus. If prices fall, then a shortage will occur, which will drive prices back toward the equilibrium point. Keep in mind that these changes in supply and demand are interrelated, not independent; as demand is changing, so is supply, price, and quantity.

I could be wrong, but I think we are more in agreement than disagreement. I don't know.

17 posted on 04/09/2002 10:17:16 AM PDT by Behind Liberal Lines
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