Talk:Demand curve
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[edit] First comments
The reference to a "downward slope" does not match the graph. Usually, an independent variable is shown horizontally (x-axis). The image in the article's top-right corner is poorly labeled and incomprehensible to all but specialists.
I teach math, I it took me quite a long time to figure out the graph. Let's make it easier for the layman, eh? --Uncle Ed 11:13, 16 July 2007 (UTC)
When describing demand & supply curves in economics we put price on the y-axis and quantity on the x-axis. For demand curves, price is the independant variable; for supply curves, quantity is the independant variable. The status quo is to put price on the left - the graphs would look much the same either way. I do, however, take umbrage at the fact that the plots on the graph are not straight lines. the labelling could do with some improvement too.--poorsodtalk 18:42, 6 January 2008 (UTC)
The aggregation of individual demand curves to derive a market demand curve is dependent on the assumption that each consumer is an idependent, idiosyncratic decision maker. This assumption means that the consumptiond decisions of one consumer do not affect the consumption decisions of any other consumer; a wholly unrealistic assumption. If you drop this assumption in the interest or realism it is no longer possible to aggregate individual demand functions. To illustrate you ask A how many widgets he would buy at a certain price and A responds 15. You then ask B how many widgets she would buy at the same price and B says 20. Upon learning of B's preferences A not to be outdone by B says I have changed my mind and would buy 21 widget. These feedback loops make aggregation impossible. Traditional economic theory also assumes that the consumption preferences, tastes, of consumers are fixed - in other words no firm would advertise. —Preceding unsigned comment added by 70.220.140.142 (talk) 12:53, 8 April 2009 (UTC)
Hello poorsod,
Are you sure that quantity is the independent variable on a demand curve? If it was, then producers would be deciding how to price their products based on the quantity in the market, correct? In that case, then if the quantity of supply goes up, then the producers would decrease their prices in anticipation of heavy competition, right? But that's just the opposite of what the supply curve shows! The curve shows the number of items produced increasing as the price goes up! I think maybe the function goes the other way.
Let's say that the current price for carrots is too high. Unfortunately, nobody knows this yet. The suppliers look at the prices and say "Look, we can make a killing in carrots!" So they produce a lot.
It's only afterward that the suppliers vote with their pricing to help change the market price to something lower.
Let's say that the current price for carrots is too low. Unfortunately, nobody knows this yet. The suppliers say "Carrots are no good right now, let's grow green beans instead." So they produce a little.
Again, it's only afterward that the suppliers vote with their pricing to help change the market price to something higher.
The suppliers don't know the equilibrium amount. Instead, they use the current market price as a proxy for the purposes of figuring out how much to produce. Then they adjust their prices to reflect their experience. Lots of price adjustments add up, moving the market price closer to the equilibrium price. If the market price is exactly at the equilibrium price, then using the current market price as a proxy works very well and the price system is doing its job.
Does that make sense? I'm only just learning this stuff. Tigerthink (talk) 03:38, 13 October 2008 (UTC)
Hi everybody,
In truth, economists both use models where price is the dependent variable and where price is the independent variable. The decision to put price on the vertical axis is just due to the convention which was established many years ago. I admit that in the years since I started studying economics I have been confused many times as a result of this convention.
On a slightly different topic, the curved supply and demand functions are perfectly acceptable. In earlier years of study they are often drawn as straight lines for simplicity but it would be incorrect to assume that they are always straight lines. (K Doerr (talk) 01:03, 5 December 2008 (UTC))
[edit] increasing marginal utility
Anomalous examples probably don't belong in the lead. I'm not sure where they really do belong, since this article is so brief now. Also, it's probably important to note that the weird implications for the individual demand curve probably don't carry over to the (more important in most cases) market demand curve. CRETOG8(t/c) 14:19, 2 September 2008 (UTC)
[edit] Tentative Correction
OK, I am just learning this stuff, but this bit didn't seem quite right: "equilibrium price(the price at which all sellers are able to find a willing buyer, also known as market clearing price)". Shouldn't it be the maximum price at which all sellers are able to find a willing buyer? For example, let's say we're at equilibrium and the sellers decide to be generous and decrease their prices. They'll sell all their inventory, but it won't be equilibrium price, will it? Tigerthink (talk) 03:08, 13 October 2008 (UTC)
