Talk:Supply and demand

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[edit] Weasel words and Partial equilibrium

The first paragraph is riddled with weasel words. "Some" economists, "Some" schools of economics, etc. In microeconomics, the principle of supply and demand is likely the most undisputed theory there is. I have never heard of, or read a paper that disputed this. I think the first paragraph gives a misleading perception that there is a dispute over it (in MICROECONOMICS). There are disputes about Aggregate supply and demand and effective policies to maintain low unemployment and economic growth and such but those are Macro issues. AS well, the last sentence "However, unlike general equilibrium models, supply schedules in this partial equilibrium model are fixed by unexplained forces." is a little confusing for someone reading this article for the first time. The supply schedule isn't unexplained. It's determined by the principle of marginal productivity of supply as well as other factors. Saying the supply schedule is unexplained is misleading. Finally, I don't see how a knowledge economy overturns supply and demand. When a product is non-rival (i.e. my consumption doesn't decrease your potential consumption), scarcity still exists. The supplier limits supply by charging for it. This is a case of a perfectly elastic supply. Supply and demand still applies. Sorry about the long rant, but I think it would be a good idea for these issues to be addressed for the sake of the article. Thanks. Justinmeister 16:41, 9 November 2006 (UTC)

Although I am of the same school of economics as the author as I am not as passionate in my response as Justinmeister, I agree that there is a lot of unnecesary POV here. The article should save all evidence for the limitations of microeconomics and supply and demand for a dedicated section or sections at the end instead of sprinkling it throughout. peergynt323

  • It shouldn't matter what school of economics you consider yourself in, Wikipedia is supposed to offer a balanced view of a subject with verifiable claims and a neutral point of view. If many economists disagree with supply and demand, they should be cited, or else delete the claim. Justinmeister 16:08, 23 November 2006 (UTC)
  • Justinmeister, why don't you edit the article into an acceptable form and remove the weasel-word tag, since you feel strongly about this issue and seem to be quite knowledgeable about it.User:Jaganath 15:18, 29 November 2006 (UTC)
It's not that I feel particularly strong about the issue, but as this is a featured article I reasoned that I should discuss issues with the article before making drastic changes. I was only hoping for some helpful suggestions before commencing. cheers. Justinmeister 00:17, 30 November 2006 (UTC)

The main criticism that I've heard about supply and demand, and a widely accepted one among economist, is about the "naming" of good, how well defined they are; to be comprehensive, that is all the literature related to Akerlof's Lemons. I've heard many strange economists, but none would dispute S&D applies with one well defined good.

[edit] Problems with "Criticism of supply and demand" section

Supply and Demand is a certain kind of regularity that exists in society is it not? Criticism of this law would presumably argue that it does not reflect socio-economic reality. Whether free markets are better than command economies is another matter entirely. While I'm just as in awe of Consequentialist arguments against socialism as anyone, the failings of command economies should probably be dealt with elsewhere. If I need to be more explicit; Socialists don't necessarily think the law of supply and demand is a fallacy, rather, they are opposed to the economic framework in which it operates. The "utopian idealsts" slur should be axed too. User:bm 21:42, 25 January 2007 (UTC)

Yes, I've been thinking about this edit over the last week or so. We need to distinguish between two kinds of criticism:
  1. It doesn't apply to free market economies (it's incorrect)
  2. It shouldn't be allowed to operate (it's evil)
My first draft of the criticism section obviously fails to make this distinction clearly. Please help! :-) --Uncle Ed 14:30, 26 January 2007 (UTC)


This critisiscm section is misplaced and should be deleted. This is an article on the law of supply and demand and these ideas do are not normative in nature. Rather they are postive statements about the relationship between prices and quantites. While there is a proper place for these critiques, this is not the article (for the critiscms presented at this point). Perhaps the editors of the critiscm section might look to the following pages for future contributions: Economics, Capitalism, Free Market to name a few.
The laws of supply and demand are premised not on market structure, but rather behavioral assumptions (Rational choice theory), demand functions are derived from Consumer theory, while supply curves are ultimately based upon Diminishing returns Joel Kincaid 23:40, 28 January 2007 (UTC)→→
Perhaps there is criticism of the normative model(s), however. I haven't seen any of core supply/demand model, but here's a criticism of the aggregate supply/aggregate demand model, and here's a criticism of the law of supply. Λυδαcιτγ 05:15, 1 February 2007 (UTC)

See Backward bending supply curve of labour which this paper generalizes to situations in agricultural production. No big deal. Its covered on the referenced page. If you want to add a summary of the article to the backward bending page, by all means do so. That is not a relevant issue on this page.

what does aggregate demand and supply have to do with this page? this is an article on microeconomics not macroeconomics?

cheers Joel Kincaid 05:58, 1 February 2007 (UTC)

I'm going to flag this section as unreferenced - personally I don't think much of it makes sense, but it should at least be clear what it's based on. I'd like to try and edit it but don't find it very coherent. If it doesn't get some references in a while, we should then proceed to delete.--Gregalton 06:12, 1 April 2007 (UTC)

[edit] To stenghten:

Socialists as in Scientific socialists (marxists) are are anti-utopians and anti-idealists. They are dialectical materialists. The tekst referring to "Utopian and idealists" is completely absurt in that sence. Marxists critisise supply and demand becouse it may (and usually does) compromise the abbility of someone to fully enjoy the fruits of his or her labour. Or, at the other hand enables someone to steal someone else's labour. When you worked 2 hours producing one bag of grain, but the prices of grain are low becouse of high supply, you could only sell it for one credit per pag. The other guy, who worked 2 hours producing one bag of strawberries, sels it for 2 credits becouse the demand is high. Now, the second person is able to buy 4 hours of your labour in exchance of 2 hours of his own. Thus, he essentialy exploits the first person's labour. Not becouse he worked harder or better, but just becouse of the anarchy of the market.

Thus, Marxists argue for a democratically planned economy, to avoid these things from happening. What we have seen in the USSR and other so called "Communist" (but essentialy stalinst, non-socialist) countries was a bureaucratically planned economy, with a parasitic caste at its top. Thus, becouse the economy was not democratically planned, demand could not be mapped and only the prestige of the Stalinist bureaucracy was importiant for the plan of production. However, even how much I dislike the Stalinists, we can see that thanks to the (even dogh bureaucratically) planned economy russia, wich lived in the middle ages at the time of the revolution, was able to develop a economy wich was able to defeat nazi-germany and put the first object, animal and human into orbit. This cannot be ignored, even in spite of the monsterous terror of Stalin and the low production of consumer goods.

People who still beleve in the idea that the capitalist market will help us (humannity as a whole) any further, those are utopian and idealist dreamers... The ones fighting for Socialism, worker's controll and a democratically planned economy, those are the realists.

Bobby Siecker.

PS. Do not forget that a planned economy was originally intended as a DEMOCRATICALLY planned economy by the marxists and the bolshewiks. Do not see the abomination of stalinism as someting that represents marxist or communist tought in any way. —The preceding unsigned comment was added by 86.84.223.146 (talk) 17:11, 26 January 2007 (UTC).

  • Wow, you really don't understand anything at all about supply and demand. Discussion pages aren't here to push your ideology though... Justinmeister 21:31, 26 January 2007 (UTC)
    • No, this is exactly the type of critical comment I was looking for. 146 has neatly summed up the chief socialist objections to Supply and Demand here. Next task: add this to the article, in a properly "encyclopedic" manner.
    • We need a balance between pro- and anti- here. --Uncle Ed 22:03, 26 January 2007 (UTC)
(Also please see comment in previous section). If contributors are going to insist on adding pro and con to this article them please cite your sources. This article has already lost its FA status, partly because of lack of source citing. I' going to work on this over the next few days. Joel Kincaid 23:47, 28 January 2007 (UTC)
Well, the pro and con doesn't have to be here. Maybe in Free market economics, Market economy or Capitalism?
Or summarized here, with a {main} link to main criticism article. --Uncle Ed 14:31, 29 January 2007 (UTC)
  • First of all, a "balanced" article is only really necessary when there is a controversy over the validity of the theory in question. Supply and demand is an undisputed theory in economics. Just because some people (such as Marxists, or socialists) don't like it doesn't mean we should offer an equal balance of positive and negative comments. As well, the argument that Siecker (146) made makes no sense at all because of his underlying assumptions. He assumes that every job should be paid the same amount for the given amount of time which is ludicrous. Plus, there is no such thing as supply being "low" and "high" in a market. Supply can only be in "equilibrium" with demand, or be above or below that. The amount one is paid for a given service isn't seemingly random (like say the fluctuations on the stock market) but rather is derived from the relationship between the supply schedule and the demand schedule. Maybe should actually read about microeconomics before arguing about a thing you don't understand. Please cite a source for any criticism or don't add any at all.I'm not trying to attack you but the reason this article went downhill was due to its content being diluted by people who felt their ideology was threatened by what economists are in universal agreement about. Justinmeister 17:45, 29 January 2007 (UTC)

[edit] New lead section

I've rewritten the lead section. I believe it's been vastly improved and now has a definition that is comprehensible by a casual reader. If other changes are needed in the lead section, let's discuss it here and reach consensus. I hope it looks it good to everyone else! Justinmeister 22:30, 29 January 2007 (UTC)

I added price to the intro.
By the way, my experience with Marxists and other free-market critics is that they use a two-track strategy. On the one hand, they will claim that allowing prices to reflect demand is immoral (or unethical); e.g., why should the poor suffer when supply drops? On the other hand, they also ASSERT that the free market doesn't even WORK. That is, they cast doubt on the idea that prices if allowed to float, will find a new stability and/or that suppliers will be motivated to "capitalize" on the higher prices by increasing supply.
I'm still not sure this article is the proper place for the debate, but I think we should respond to the Marxist strategy in two different ways:
  1. We should not cover the ethics of free market economics here. That ought to be covered in Capitalism.
  2. We should provide sound economical research about whether or not the Law of Supply and Demand actually works as described. --Uncle Ed 14:56, 30 January 2007 (UTC)
  • I rephrased the lead section again to accommodate price (you're right, it is integral). I changed "quantity supplied" and "quantity demanded" to supply schedule and demand schedule, as that is more accurate. By the way, its ridiculous to show research "proving" the workings of supply and demand because it is so fundamental in economics. Economics would simply not work without this concept. Economics IS supply and demand, in essence. The point of the article is not to "prove" the theory, but to inform. Justinmeister 16:42, 30 January 2007 (UTC)
    • I don't know if you've ever spent much time at a university (let alone one in Boston), but academia's take on Economics is not just a rational, objective description of free markets in general or the amazing workings of the US economy. Quite a few advocates of socialism are out there, buddy: people who will die for Marxism, command economy, etc. - or make you die for it.
    • Power, money, knowledge - this triangle dominates the world. And what seems obviously true to you (or me) is ofter hotly disputed or even condemned as "socially incorrect" in certain places. --Uncle Ed 17:21, 30 January 2007 (UTC)
    • The point is no economist disputes the basic supply and demand model. BTW, some people still believe in a flat earth too. As well, just because people make a lot of noise about it doesn't validate their argument. Most of their disagreements are based on fundamental misunderstandings of an issue that they don't understand. It's the same with evolution. People make a lot of noise about how they think it's flawed, immoral etc. but you're hard pressed to find a biologist who doesn't accept it. Having a section on the validity of a socialists viewpoint distorts the importance of the law of supply and demand in economics. Justinmeister 19:07, 30 January 2007 (UTC)

I'm not sure why Ed reverted wholesale my changes to the intro, since I thought some of them were not at all controversial. But I'll go through and redo the changes one by one, so you can object to specific ones. Λυδαcιτγ 20:12, 31 January 2007 (UTC)

[edit] Moved

The law of supply and demand states that "the price level will move toward the point that equalizes quantities supplied and demanded" ([1]). The law of supply states that supply is directly proportional to price. The law of demand states that demand is inversely proportional to price.

Since none of these laws circumscribes this article, its name should be simply "Supply and demand". Λυδαcιτγ 05:20, 31 January 2007 (UTC)

Moved back. Please discuss moves like this before making them.
Anyway, the article is not about supply and demand but about the Law of Supply and Demand which discusses how price is related to the two.
If you know of variations in the expression of the "law", please describe them before proposing a move. Thanks! :-) --Uncle Ed 15:38, 31 January 2007 (UTC)
  • To be honest, law seems to have a POV attached to it. To me, it basically says "you're stupid if you don't agree". I think it would be better to change it to: Principle of Supply and Demand. THat would be more accurate and neutral, since in economics, there aren't really laws but fundamental principles. Just my thought. Justinmeister 16:08, 31 January 2007 (UTC)
  • Ed, I would have hoped the ludicrousness of "Moved back. Please discuss moves like this before making them." would have been obvious before doing it. Leave the article were it has been for the longest time first, then get consensus to change it, which you failed to do when you made the move to your version in the first place. Instead you've decided where you want it, and are now reverting. That's extraordinarily unhelpful. Lets keep it without the law, it's more encyclopedic, and the topic is more commonly called that. The use of law is not universal. - Taxman Talk 17:21, 31 January 2007 (UTC)
    • Yes, I see my mistake now. I'm the one who didn't get consensus. Sorry. :-( --Uncle Ed 18:17, 31 January 2007 (UTC)
        • Sorry, didn't mean to be harsh, it's just frustrating to see constant reversion when it is so easy to avoid. - Taxman Talk 00:13, 1 February 2007 (UTC)
      • So can I move the article back? Right now there are a bunch of double redirects. Λυδαcιτγ 18:32, 31 January 2007 (UTC)
      • Well, I went ahead and moved it back. Λυδαcιτγ 20:09, 31 January 2007 (UTC)
        • bah! No, that was my whole point: just leave it where it is and discuss. Perhaps draw some wider input if possible. - Taxman Talk 00:13, 1 February 2007 (UTC)
          • Oh, I thought that "Leave the article were it has been for the longest time first, then get consensus to change it" meant that you thought it should be moved back to its original title. Anyway, by all means let's discuss. Λυδαcιτγ 01:48, 1 February 2007 (UTC)
First, I do not see why one should think that the term "Law" used in the context of an economics principle is POV. See Law (disambiguation) and read the section regarding the use of the term "Law" in the context of science. Second, the standard usage is to speak of the "Law of Demand" and the "Law of Supply". Given the fact that these two models (Supply and Demand) are very important in economics, and very general, at some point it would be useful to have an article on each of those concepts.
The idea that is captured by the term the "Law of Supply and Demand" is, as was mentioned earlier, how equilibrium prices in a market are determined by the interplay of these two forces. While I do not find it a particulary descriptive term, the expression is in fact used in many principles levels textbooks. I teach those courses and can say that it is used by Mankiw (The most popular principles text at the moment), as well as by Tucker, and several other current books that I can not put my finger on at the moment.
Thus I would support keeping the title "Law of Supply and Demand". This reflects the usage that would be familiar to a reader that is using one of the current textbooks, and it would be good to keep in mind that a reader not yet in an economics course, should see terms that are actually used when they attend a course.
Why not use principle instead of law. Well I've mentioned the Law (disambiguation) page. There the key feature would be that a 'Law' would have some empirical verification or support, which is not needed for a principle, which can simply reflect some theoritical point. The difference is not much, but one would surely not want to say the "Principle of Supply". We are trying to produce a document that reflect the usage of these terms in economics, and not our opinions about whether its a valid use of the term law (i.e. this is not the place for dicussions of Hard science vs. Soft science, which I assure you will start raising POV flags quickly -- the proof, as you'll see on those pages, is in eating the pudding).
Finally, it allows us to at some time illustrate the point with the (perhaps bad) joke of a person living above the artic circle trying to sell ice. His friend makes the comment that he thinks its the "Law of Supply and Demand" not the "Law of Suppy or Demand"!
Joel Kincaid 22:02, 31 January 2007 (UTC)
I agree that calling the law of supply and demand a law is a good idea. But I don't think it's a good title for the article.
Let's look at how other sites describe it. These are the top sites from a Google search for "supply and demand" (no quotes). I ignore four ([2] [3] [4] [5]) that don't mention any laws.
  1. This page discusses demand and supply separately, and then discusses them together as a model. The law of demand is discussed, but interestingly, the author maintains that "there is no law of supply that matches the law of demand" (I disagree, since any law can have exceptions, and, as discussed in our article, the law of demand can). The law of supply and demand is not mentioned.
  2. This page discusses only the law of supply and demand: "The law of supply and demand predicts that the price level will move toward the point that equalizes quantities supplied and demanded".
  3. This page discusses the laws of supply and demand separately, and does not mention the (singular) law of supply and demand.
  4. This page seems to suggest that the law of supply and demand refers to the mechanism by which supply and demand equalize.
  5. This page http://william-king.www.drexel.edu/top/prin/txt/SDch/SD10.html discusses] the law of demand only.
  6. Here is my strongest support. Henderson explicitly refers to the "three laws" of supply and demand. Here are his definitions:

LAW I. When, at the price ruling, demand exceeds supply, the price tends to rise. Conversely when supply exceeds demand the price tends to fall.
LAW II. A rise in price tends, sooner or later, to decrease demand and to increase supply. Conversely a fall in price tends, sooner or later, to increase demand and to decrease supply.
LAW III. Price tends to the level at which demand is equal to supply.

In summary, I don't think the law of supply and demand is a widely-used term to describe the general model and theory of supply and demand. Rather, I think it's one of the three laws that, as Henderson says, "are the cornerstone of economic theory". Λυδαcιτγ 02:35, 1 February 2007 (UTC)


Ok. Let me mention a few things first. The correct google search would be as follows (including the qoutes): "+The Law +of Supply +and Demand" --- the qoutes give you exact phrase, the plus signs tell google to actually include the commen words 'the', 'of' and 'and' as specified. Doing this yields 256,000 pages. Doing the same search on google scholar yields 2320 hits. So you need to use the correct search if your going to report google hits (I dont trust that much anyway)
The text you cite, while a nice open document was published in 1922 (released in 2004). Things have changed a bit since 1922, particulary the terms used in principle level texts. Given that Marshall's text was first published in 1890, its not suprising that one would find multiple interpretations of terminologly 32 years after the concepts were formally introduced.
As I mentioned before this term is used in current principle level texts.
Thus, there is ample evidence of term being used on the web, and the fact that it is used in principle level texts.
Cheers Joel Kincaid 02:49, 1 February 2007 (UTC)
My purpose was to see whether the "law of supply and demand" was discussed frequently in sites explaining supply and demand. To search for "the law of supply and demand" (btw, I don't think the pluses are necessary in an enquoted search) would have eliminated all the results that didn't contain this term.
Searching for the term, though, turns up descriptions of the law of supply and demand as asserting that if supply is greater than demand, price will fall; if demand is greater than supply, price will rise. See [6] [7] [8] [9]. The last site actually lists three laws of supply and demand: "The first law of supply and demand states: when demand is greater than supply, prices rise and when supply is greater than demand, prices fall. These forces that push markets towards equilibrium also depend on how great the difference between supply and demand is. The second law of supply and demand, then, states: the greater the difference between supply and demand, the greater the forces on prices are. Naturally, then, the third law would say: when supply is the same as demand, prices do not change." I like this division.
Perhaps Marshall's text is out of date, but it certainly illustrates one possible nomenclature.
In terms of the use of the law in textbooks, the only one I have is Economics, which is AFAIK the most popular of all introductory textbooks. The 17th edition (2001) discusses the "law of downward-sloping demand", but no laws of supply or supply and demand. Perhaps you could look up the discussion of the laws in other texts. Λυδαcιτγ 04:53, 1 February 2007 (UTC)

Did you actually read my earlier comments? I teach economics! I explained that the term "The Law of Supply and Demand" is actually used by Mankiw --- Mankiws text is the most popular principles text on the market at the moment. Its used by most text books today. Check the citation here a link to the text of the Stiglitz's 2001 nobel prize lecture: In that lecture the following was used:

D. Consequences for Market Equilibrium The law of supply and demand had long been treated as a fundamental principle of economics. But there is in fact no law that requires the insurance firm to sell to all who apply at the announced premium, or the lender to lend to all who apply at the announced interest rate, or the employer to employ all those who apply at the posted wage. With perfect information and perfect competition, any firm that charged a price higher than the others would lose all of its customers; and at the going price, one faced a perfectly elastic supply of customers. In adverse selection and incentive models, what mattered was not just the supply of customers or employees or borrowers, but their "qualityn-the riskiness of the insured or the borrower, the returns on the investment, the productivity of the worker.

In the above I added the bold. this is the reference: Information and the Change in the Paradigm in Economics, Joseph E. Stiglitz,The American Economic Review, Vol. 92, No. 3. (Jun., 2002), pp. 460-501. and this is the link [10]. Now this is a JSTOR link -- you may may not get access to the cite .... however you can see the first page.

If you won't listen to me, I'm hoping a Nobel Prize winner's use of the term will indicate that the term has some acceptance among professional economists, and that it should be obvious that what is important here is not what you can find on the web (by the way -- my suggestions about the search are dead on -- if people insist on using google to conduct some popularity contest of terms, then for goodness sakes, use the proper search techniques). Furthermore on JSTOR there are at least 500 journal articles (peer reviewed) that contain at least once phrase 'the law of supply and demand'.

If this does not convince you, please let me know what evidence I can produce. But before you do please review: WP:RS to name but one. All, and I mean all of the recent edits (ok maybe not all) to this page have degraded the quality of the information to a point where there is little to no hope of reaching a FA status, let alone a GA. Please, while enthusaism is a great thing, using and abusing the web for sources (the web does a generally horrible job with economics in particular it seems), and rehasing stuff that's coming from text books published almost a century ago is doing no one a service. Cheers Joel Kincaid 05:41, 1 February 2007 (UTC)

Joel, I don't disagree with you that the law of supply and demand has valid meaning, or that professional economists, article writers and Nobel Laureates use it. What I'm saying is that the law is not broad enough to cover the scope of this article. The law simply says that because of price, supply equals demand. I think the law is narrow enough to be covered in one paragraph:

The law of supply and demand states that the market price of a good is the intersection of consumer demand and producer supply. If the price for a good is at a low level where consumers demand more of the good than producers are prepared to supply, there will be a shortage of the good, and consumers will be willing to pay more for it. The producers will increase the price until it reaches the level where consumers would not buy any more if the price was increased. Conversely, if the price for a good is at a high level where the suppliers would like to produce more than the consumers will buy, the producers will be willing to lower the price. The price will fall until it reaches the level where consumers would be willing to pay more for the good.

The model of supply and demand is a hell of a lot more complex than just this law. There's the other two laws, and the complexities of the supply and demand schedules and their elasticities. And then there are additional parts of the model like minimum wages and price caps which actually invalidate the law of supply and demand.
I think the Internet does a decent job of covering economics, though you do have to weed out the junk. NetMBA's site is a good short explanation, in my opinion. And I think the consensus that I saw on the limited meaning of the law can't be discarded simply because I used Google.
But I understand that textbooks are often a more reliable source. As I said, Samuelson and Nordhaus don't even use the term "law of supply and demand", while Henderson describes it as a limited component of the S+D model. But Mankiw does. So could you tell us his definition of the law? Λυδαcιτγ 22:20, 1 February 2007 (UTC)
Ok. Lets consider what this page is (or was) about: it was about "the law of supply and demand". It was not about "the law of supply" nor was it about "the law of demand". Those two articles, which have not yet been created (but I mention that they should be in an earlier discussion on here), are sufficiently broad and important to justify an article each.
This article was about "the law of supply and demand". That law refers to the mechanism for price and quantity determination in markets. "The Law of supply and demand" deals with equilibrium outcomes (Prices and Quantities). "The Law of Supply" deals with the relationship between prices and quantity supplied. The law of demand refers to the relationship between prices and quantity demanded.
To sum up: There is a "Law of Supply", there is a "Law of Demand", and there is a "Law of Supply and Demand". This article, and the reader of this article and other economics articles, would be best served by having a relatively concise discussion of each of the "Laws" on separate pages. As an example we have an article on the Money supply that does not need to be discussed here or on the (eventual) article about "The Law of Supply".
I suggest that before going on a major rewrite,take a look at the List of economics topics for what articles exist. For instance you mention that want to discuss elasticity here. Fine, but it should be in passing, because the main article is Elasticity (economics). Furthermore, there are plenty of topics that would be useful to mention in this article, some of which have not yet be discussed: The role of prices in an decentralized economy, price determination under different market structures, to name a few. Again for all of these, its more useful to see what's out there before adding stuff (or subtracting stuff) willy-nilly. There are many pages that need to be merged, but I think those request should be placed on the Portal:Business and economics page, as well as in the future, I would suggest that any page moves should be discussed prior to the move on the page and on the portal.
Joel Kincaid 23:14, 1 February 2007 (UTC)
I agree strongly that this article should be a focal point for a variety of others. How about this: we'll write a new article at law of supply and demand, which will go into detail about the mechanism that achieves equilibrium. We'll keep this article as "supply and demand", and discuss here the entire model: an overview of the supply and demand curves (each of which will have its own page) including the laws of supply and demand, the law of supply and demand, and complications including other market forms and government interference. Thus, readers who want a basic overview can turn to this page, while those looking for a more detailed examination of particular parts of the model can go to their main pages. Λυδαcιτγ 00:49, 2 February 2007 (UTC)
I'm not sure I can add anything here. Per the naming conventions I think that an article's title should reflect the most common, universal name for the topic. While it is undeniable that Law is used to refer to the topic, it's not universal. To justify moving to that title would in my opinion require showing that it is nearly universal. Not just that the most popular text(s) refers to it that way, but that nearly every reference to the concepts of supply and demand refer to it as the law of supply and demand. So that's my two cents, forgive me if I haven't absorbed something from the rest of the discussion. - Taxman Talk 22:30, 1 February 2007 (UTC)

[edit] What the "law" describes

the model really describes the relationship between producers and consumers - oh, okay, that sounds pretty good. Let's hear more abouth that, then. --Uncle Ed 20:29, 31 January 2007 (UTC)

This change removed the technical language ("the relationship between the supply schedule and the demand schedule") from the intro by generalizing. While the model certainly describes the supply and demand schedules, its actual purpose is to show how producers and consumers interact. Generalizing both looks at the big picture and leaves room for additional parts of the model including price ceilings and taxes. Λυδαcιτγ 05:03, 1 February 2007 (UTC)


[edit] Relationship between consumers and producers

The first sentence in the lead is now a little confusing. A casual reader could interpret it to mean that their is a verbal or written agreement between consumers and producers. The real relationship is between the supply schedule and the demand schedule. It's how these interact that produce equilibriums . I feel that it should be clarified a bit. Justinmeister 01:01, 1 February 2007 (UTC)

How about now? Λυδαcιτγ 04:57, 1 February 2007 (UTC)

[edit] Title of page

Let's do a strawpoll, giving a brief summary of reasons. (Do not repeat points made above; simply allude to them! :-) --Uncle Ed 14:45, 1 February 2007 (UTC)

I asked for more opinions at Wikipedia talk:WikiProject Business and Economics. Λυδαcιτγ 22:29, 1 February 2007 (UTC)

Keep page at Supply and demand:

  1. Audacity: describes entire model; "law of supply and demand" only refers to the move towards equilibrium

Move page to Law of supply and demand:

  1. Uncle Ed: best known phrase; used in economic textbooks; does not connote an absolute
  2. User:Joel Kincaid: See my comments above -- standard usage is the "Law of Supply and Demand"

Other suggestions:

So far, so good. But 2 to 1 is not enough to justify yet another jarring page move. Unless more people jump on the bandwagon, I'm not going to touch the title.. I'd rather work on the text right now. And Audacity is doing an audaciously good job there! :-) --Uncle Ed 22:28, 1 February 2007 (UTC)

[edit] Best-known phrase?

I was surprised to see Ed comment in the straw poll that the "law of supply and demand" is the best known phrase. I don't know if I'd ever heard the term before seeing this page. If you were to look up an article like this in a different encyclopedia, what would you look under? Λυδαcιτγ 22:42, 1 February 2007 (UTC)

Similar debate on "Double entry book-keeping system" and "Double entry accounting system" which refer to the same thing, the keeping of books, hence bookkeeping used to perform accounting but accounting is a familiar term but a wrong term in this case.

Terms come to be misused or simplified for lay people to understand. "Supply and demand" to me is the term. "Law of supply and demand", you could say "rules of supply and demand"; law emphasises its importance and that there are calculations to back it up. There is no law. Gravity is Gravity despite the use of "defying the laws of gravity", they are just numeric calculations. Supply and demand is an area which has calculations (laws or rules) to support it. NilssonDenver 22:27, 8 February 2007 (UTC)

[edit] Buyer's market and Seller's market

I've redirect Buyer's market and Seller's market here. But the dictdef text probably should be integrated into excess supply and excess demand sections... 132.205.44.134 22:50, 14 May 2007 (UTC)

[edit] Buyer's market

A Buyer's market is a phenomenon in business or economics. A Buyer's market is a market where supply is higher than demand. According to economic theory this implies that the supply price is higher than the demand price.

[edit] Seller's market

A Seller's market is a phenomenon in business or economics. A Seller's market is a market where demand is higher than supply. According to economic theory this implies that the demand price is higher than the supply price.

[edit] articles

The articles were transwikied to wiktionary already. 132.205.44.134 22:50, 14 May 2007 (UTC)

[edit] Delete "Criticism of Marshall's theory of supply and demand"?

Of course. Standard non-highbrow principles of economics textbooks like McConnell and Brue have for a considerable time carried Aggregate Demand and Aggregate Supply. It is simply not controversial as applied to macroeconomics, despite the suggestion otherwise by use of the term 'criticism'. The presence of this section might suggest otherwise, except that at the end there is the mention of mainstream economists who maintain that D & S are useful for macro. Marshall never claimed that the model could be used for macro purposes. So the criticism is a straw man. It also lacks verification. There are different micro and macro rationales of D and S. Maybe that needs a section. But that's no reason for keeping the section in question. Is it interesting enough to retain in section on the history of D & S? I don't think so and is tangential to this article. I believe that its inclusion violates Wikipedia:Neutral point of view#Undue weight and Wikipedia:Verifiability policies. Comments welcome for or against. --Thomasmeeks 21:42, 25 May 2007 (UTC) (fixed typos) Thomasmeeks 01:41, 28 May 2007 (UTC)

AGAINST deleting the section:


FOR deleting the section: Agree. Although useful bits/quotes should be incorporated (although much of it appears to be nonsense/straw men. For example, I don't think the note about prices being 'sticky' contradicts the idea of supply and demand, but the note and reference can be used.--Gregalton 05:13, 28 May 2007 (UTC)

In line with the above discussion (not merely counting heads as in a vote), the article section in question (which was section 11), has been removed from the article and moved below. Briefly stated from the above, the problem is that the heading and much of 1st 2 para. seem to violate Wikipedia:Neutral point of view#Undue weight and Wikipedia:Verifiability policy. Despite postings requesting citations in the section, none has been forthcoming. As the template indicates, such material is subject to challenge and removal at any time.
A brief alternative section indicating uses of Aggregate Demand and Aggregate Supply might be useful. The current section so skews presentation of the subject as to discourage efforts at mere revision. Why not start with a fresh slate instead of taking the current highly problematic "criticism" reproduced below as though it has serious standing? The 3rd para. below remedies para. 2 by contradicting it, in effect, "pay no attention to what you've just read" -- good advice perhaps but symptomatic of the section. Intent here is to improve the article, which is what Talk pages are for. --Thomasmeeks 15:13, 20 June 2007 (UTC)

Deleted section 11 from article:

[edit] Criticism of Marshall's theory of supply and demand

 This section does not cite any references or sources. (April 2007)
Please help improve this section by adding citations to reliable sources. Unverifiable material may be challenged and removed.

Marshall's theory of supply and demand runs counter to the ideas of economists from Adam Smith and David Ricardo through the creation of the marginalist school of thought. Although Marshall's theories are dominant in universities today, other economists have disagreed with it.[citation needed] One theory counter to Marshall is that price is already known in a commodity before it reaches the market, negating his idea that some abstract market is conveying price information.[citation needed]

Keynesian economics also runs counter to the theory of supply and demand.[citation needed] In Keynesian theory, prices can become "sticky" or resistant to change, especially in the case of price decreases. This leads to a market failure. Modern supporters of Keynes, such as Paul Krugman, have noted this in recent history, such as when the Boston housing market dried up in the early 1990s, with neither buyers nor sellers willing to exchange at the price equilibrium. Gregory Mankiw's work on the irrationality of actors in the markets also undermines Marshall's view of the forces involved in supply and demand.

Most economists (including Keynes, Krugman and Mankiw) do not hold that any of these criticisms fundamentally undermine the basic theory of supply and demand, even when they study so-called exceptional cases. For durable assets such as residential housing, or indeed any good which may be stored, the supply and demand model can be modified to take into account expectations of future prices by incorporating multi-period pricing issues. Most of the seeming exceptions to the theory of supply and demand, such as price stickiness, can be accounted for by similar modifications to the underlying model, and particularly by means of incorporation of uncertainty (risk).

[edit] Clean-up required

Someone needs to restructure this article. It has repetitive statements, not many citations and lacks flow and readability. Thanks.


Thank you for your suggestion! When you feel an article needs improvement, please feel free to make those changes. Wikipedia is a wiki, so anyone can edit almost any article by simply following the Edit this page link at the top. You don't even need to log in (although there are many reasons why you might want to). The Wikipedia community encourages you to be bold in updating pages. Don't worry too much about making honest mistakes — they're likely to be found and corrected quickly. If you're not sure how editing works, check out how to edit a page, or use the sandbox to try out your editing skills. New contributors are always welcome. Λυδαcιτγ 05:36, 19 June 2007 (UTC)

The template above amounts to saying, "So fix it." Well, here are some things that need to be fixed.
The problem with the article is that it uses so much technical mumbo-jumbo that the general reader cannot understand it.
Are we saying that demand drives up prices? And that higher prices will stimulate supply? If so, that should be made clear in within the first 200 words of the introduction.
Are there economists who deny the theory of supply and demand? Or have any exceptions been found? If so, these should be mentioned. (Maybe supply and demand is not really a "law" but wishful thinking?)
Last but not least, if there are economists or political activists who oppose the idea of letting market prices influence supply, then we should indicate this connection. Perhaps it is socialists who voice this objection the most, preferring that market signals from consumers be ignored and that central planning be used instead. A brief mention of this advocacy here would be good, with references to other economic systems where alternatives to the free market have been tried. --Uncle Ed 03:47, 6 July 2007 (UTC)
You make some interesting points, which I hope will be addressed in due course. The placement of the History section right after the Lead gets in the way of answering your 1st question. It does need work. The lead gives an overview. Without careful explanation, however, quick answers to your questions in the article may only mislead. --Thomasmeeks 19:13, 8 July 2007 (UTC)


[edit] Clean-up required: Market clearance

Why is the indednted material below worth preserving in the article? Can it be rehabilitated? It was section 6. If you think you can improve it enough to put it back, please try. It should not be up to the reader to figure out why it is there. Most of 1st para. recaps section 2. The rest seems incomplete by comparison with the main article. 2nd para. seems to recap the supply and demand. That seems pointless. --Thomasmeeks 01:03, 9 July 2007 (UTC) (proofreading Edit) Thomasmeeks 08:19, 10 July 2007 (UTC)

====Market clearance====
Main article: Market clearing
A market clears at the point where the quantity demanded is equal to the quantity supplied. Markets which do not clear will react in some way, either by a change in price or in quantity produced. Graphically the situation can be represented by two curves: one showing the demand curve and one showing the supply curve. The market clears where the two curves intersect. In a general equilibrium model, all markets in all goods clear simultaneously. For a century most economists believed in Say's Law, which states that markets, as a whole, would always clear and thus be in balance.
The market clearing price contains no maximization basis. As a result, any disequilibrium (excess demand or excess supply) is just a matter of graphical exercises. Some economists regarded that a demand curve could be represented by a diminishing marginal use value curve (the schedule of a consumer's maximum willing to pay with different quantity endowments). By this framework, people will buy when the market price is low enough, and they will sell when the price is high enough. In market clearing condition, the market price implies that the marginal use value of all participants are equalized. In other words, mutual gain of exchange is exhausted. Here come the basis of maximization for the concept of market equilibrium.

[edit] History section moved to last sect. of article

That's what the 08:19, 10 July 2007 edit of the article did. The intent was not to bury the History section but to save it. There might be some who would read the current article Edit for the first time and say: "Dang. Where's the History section." They'll find it easily enough in the Contents box that immediately follows the Lead section. And they can click down to it. One suspects that they are in a distinct minority. Rather, I believe many more might be put of off by the longish History section, heavy with Red and Blue links (as if to say: "You're not going understand ths article without first reading this section, & you're not going to understand this section without reading the links, Pumpkin."

OK, I exaggerate. Still, there is the fact that the section is not necessary for understanding the rest of the article. For those uninterested in the history, there is the danger of a snap decision that if an "uninteresting" section gets in the way of the rest of the article, some may stop reading, concluding the editors are of the "Eat-your-spinach" school of education. The object of the article should be to make it so interesting that readers are skipping ahead to read the History section. I believe that its current locationis likely to increase readership of the article & move the article closer to its glory days as a Featured Article. --Thomasmeeks 09:13, 10 July 2007 (UTC)

Unorthodox, but I like it. Λυδαcιτγ 22:35, 10 July 2007 (UTC)

[edit] Seriously? Is this really the latest in economics

A theory that is essentially unchanged in a century? I'm not an economist... but I find it hard to believe that statements like "The model predicts that in a competitive market, price will function to equalize the quantity demanded by consumers and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity" are anything but Intro to Microeconomics 101. Equilibrium means a steady-state solution --- it should be obvious that markets are rarely in steady state. Steady-state is needed for equations that are not time-dependent to be of any use at all. Since the supply and demand equations appear to be polynomial functions of price from the example graphs, for equilibrium to be at all applicable (quasi-equilibrium), one of the functions must be "hot," relative to the other (the coefficients and forcing term must change many orders of magnitude faster than the other). Otherwise, any serious analysis would have to include the time-dependent terms.

On top of that, it appears from paragraphs like "... some people will buy a luxury car because it is expensive. In this case the good demanded is actually prestige, and not a car, so when the price of the luxury car decreases, it is actually changing the amount of prestige so the demand is not decreasing since it is a different good...," that when the data doesn't fit the curves one simply adds more terms. That's not science, that's curve fitting! Any function can be fit with a polynomial with enough terms. (And why aren't the equations explicitly shown in this article? D = C + Ax + ... ? Would one find such an oversight in a physics article?) Economists must know about falsifiability, no?

In biology, the wolf and rabbit problems is already quite old: the relationship between the number of rabbits and wolves is not a function, but has hysteresis. Of course, one could reduce it to a series of tweaked monotonic curves instead of looking at the underlying relationships, but that would be scientific nonsense. Aren't there any economists out there whose models aren't just poorly reworked 19th century thermodynamics? I find it hard to believe that with the number of PH.D's being produced in economics for the last century, this kind of nonsense hasn't been seriously debunked yet. (Of course, I could be wrong --- sigh). The sentence "For a normal demand curve, this can result in two stable equilibrium points - a high wage and a low wage equilibrium point," reveals the point --- it's not equilibrium at all, since there are metastable states.

Please, there must be someone with a serious academic economics background willing to take a stab at this --- at least some references to some work that use post 1890's math to analyze market behavior? Callithrix 21:58, 7 August 2007 (UTC)

Good theories can be far older that 100 years... Anyway, though, as you say, this article is Intro to Microeconomics 101. Basic economics relies on very simple mathematics. Why aren't the equations explicitly shown? Because they are not needed to understand the concepts. The model doesn't presume that supply and demand are polynomials or any other type of curve - just that demand is downwards-sloping and supply upwards-sloping. You are criticizing the model for its mathematical simplicity, when that is its strength. I am sure that there are plenty of economic models that do take into account advanced math, but they aren't needed for the basics that this article describes. For example, it's true that equilibrium never actually occurs, but markets do tend towards equilibrium, as described in the Changes in market equilibrium section. If the changes produced by time are relatively small, time does not need to be taken into account in a simplified model. Λυδαcιτγ
As Einstein said, as simple as possible but no simpler. If you are giving an account that is only applicable under very limited conditions, you need to state what the assumptions are - what the conditions are. The article has basically a couple of lines about "commodities" but in essence implies that supply and demand equilibrium is generally applicable. There are very few markets that I can see that actually tend towards equilibrium, and they usually have very high-frequency AC components. All the interesting markets are in constant fluctuation which is internally driven. My point is that this is a highly idealized model which only seems to apply even approximately for commodity markets which either have a very slow change in demand vs supply, or visa versa. Since the "real" economy is much more complex, a warning about this limitation and a pointer towards more realistic assessments is necessary - obviously I do not claim to have the expertise for such. If one were to write an intro to geometry, of course one would include Euclid; but then one would definitely point out that Euclid's geometries are only applicable for flat geometries - it doesn't work, for example, when tracking aircraft. In the case of economics, there are very, very few flat geometries.
Since basic physics doesn't depend on "simple mathematics", why would a far more complex system like economics depend only on "simple mathematics"? I guess it's possible that some economists have only used simple mathematics - but that's their failing, not good models. And if the mathematics is actually so simple, why not state it explicitly? One would not describe physical concepts (Newton's laws of motion) by just giving a verbal description - one uses a verbal descriptions just as in the intro to that article, and then describe the mathematics. The mathematics are the concepts, not the verbal description which are always ambiguous and value-laden. At least for scientific endeavors. I've read a couple intro microeconomics textbooks - they were complete hogwash, which was why I checked this article to see if it linked to some actually useful work. In simple words, when I and anyone else looks to invest, one looks for market disequilibria; that's what matters, the rate of change, the direction of change, and especially the highest order derivative one can identify - that's how capitalism works, capital can care less about steady state, no profit there.
Just try to describe the behavior of a simple, single-celled organism by equilibrium equations. Then I might believe that economies can be described the same way, to any reasonable approximation. You know what you call an organism approaching equilibrium? Dead. Callithrix 23:19, 9 August 2007 (UTC)
Check out Elasticity (economics) for a simple way of looking at rates of change. Jrincayc 02:35, 10 August 2007 (UTC)
I found a book that might interest you that does mathematically analyze economics: Numerical Methods in Economics. Jrincayc can give you a better idea, but my guess is that this is close to the latest in economics.
In regards to this article, let's continue the analogy with Euclid. For a basic education in geometry - the type that an encyclopedia article on the subject should offer - Euclid's mathematics suffices. It is inadequate for specialists or for advanced students, who will be directed to the Non-Euclidean geometry article. For supply and demand, the main article does not need to go into details - but other articles do. There are a few - Gini coefficient, Elasticity (economics) - but there's room for more. I don't know enough to write them.
I think the warning you advise may be obvious from the simplicity of the concepts in this article. But maybe not. However, I'm not sure how far off the models are. Although a market may not be at equilibrium, the effects described in Changes in market equilibrium should still occur - when the demand increases, the price rises, etc.
I agree about the importance of disequilibria in investing - but this article is not designed to help with investing. I'd say its main application is in public policy. Λυδαcιτγ 05:21, 10 August 2007 (UTC)


This discussion is why I'm an eventualist -- Callithrix please, if your going to make a call for Ph.D.'s to edit, I'd suggest that you take the time to actually examine the current state of the field before filling up space here with irrelevant material (what exactly do cells and Einstein have to do exactly with the law of supply and demand) that any Ph.D. in economics would (at best) find amusing and (at worst) evidence of why they do not want to participate. I suggest you google "replica economy" and start with the first two JSTOR hits -- after reading those articles and perhaps their references then please come back and edit the pages here to your desire. Of course most of those refer to general and not partial eqilibrium models. Also check out Econometrics for for an answer to one of your questions in your initial post. Happy reading. Corebreeches 15:10, 10 August 2007 (UTC)

I can't add to the excellent answers above. To the extent the question is not already addressed (by inference anyhow) in the article, perhaps more explicitness would help. There is additional help in the Lead links. The generality of analysis is suggested in Supply and demand#Changes in market equilibrium. The Einstein quote is at the top of 1 of the early chapters in William Baumol and Alan Blinder (2003, 9th ed.), Economics, Principles and Policy to make a general point about characteristic simplifying assumptions that run through the subject. Given the breath-taking lack of general knowledge of Econ. 101 principles, there is not much time for apologies by the econ. profession as to plying such a model. Practical neglect of its implications is only too frequent. --Thomasmeeks 19:33, 10 August 2007 (UTC)

[edit] Italian

You know, there's an italian page for this, but it's called Domanda e offerta. Maybe we should link to it. —Preceding unsigned comment added by 128.220.159.20 (talk) 05:54, 30 November 2007 (UTC)

[edit] Price control

What happens if a government sets a price range for a product and the value of the product falls or rises beyond the price range according to supply and demand? 88.112.193.13 (talk) 20:03, 6 January 2008 (UTC)

[edit] Audio version (never mind, I give up)

I'm making some minor changes to the article along the way, but since I'm not an expert in microeconomics, I may make a mistake. If that occurs, please tell me so I don't have to re-record the article. Hoogli (talk) 02:25, 30 May 2008 (UTC)

Your changes look good so far, as of this revision. -FrankTobia (talk) 15:56, 30 May 2008 (UTC)

Wow, this is harder than I anticipated. The article needs some serious cleanup. Still, I'm not giving up. Hoogli (talk) 01:22, 31 May 2008 (UTC)

Heh, that's a pretty funny subheading. In any case, I think you did a great job with the cleanup work, and attempting an audio recording was a valiant effort. I would suggest recording featured articles, which are much more likely to be well written. Good luck! -FrankTobia (talk) 02:29, 31 May 2008 (UTC)

[edit] goods and services

I just got rid of a few "goods and services" type bits, to make them just "goods". I think we can take it for granted that a service can in the generic sense of this article be a "good". And having "...and services" tacked on all over the place looks ugly to me. Cretog8 (talk) 15:42, 3 June 2008 (UTC)

[edit] "sweet inferior"?

The article says, "Giffen good (a sweet inferior, but staple, good)". Does that "sweet" mean something real? Cretog8 (talk) 16:17, 14 June 2008 (UTC)