Talk:Supply and demand/Archive 1

Microfoundations?

Shouldn't the page contain more of an explanation of where the supply and demand curves come from? It could be integrated with the page on marginalism (which by the way severly needs a clean-up).

I disagree. The law of diminishing marginal utility does, indeed, explain why a demand curve slopes downward. However, the law of diminishing marginal returns explains why a supply curve is generally depicted as having an upwards slope. Because the "supply curve" for any firm is the marginal cost curve above the average cost curve, diminishing marginal returns stipulates that marginal cost rises at every quantity. What you've said is accurate (the price off the supply curve at any given point represents the marginal willingness to accept), but I believe technically insufficient.Jackson744 03:04, 3 April 2006 (UTC)

I wish someone could relate this principle to the matter of "indirect taxes." I recently read -- it may have been in Wikipedia -- that indirect taxes are taxes levied on a company but passed along to the consumer, through higher prices (I imagine that gasoline taxes operate this way). Is this a violation of the law of supply and demand? If the price of gasoline is already as high as the market would bear, then shouldn't gasoline companies pay the taxes out of their profits? SR

Yes, if the company is taxed, it has to solve an optimization problem: it could either add the whole tax to the price, thus decreasing sales and profits, or leave the price alone and pay the tax directly out of its profits, or do something in between that maximizes profit. But the company's profit will always be lower than before the taxation. AxelBoldt

have economists developed models to explain/predict when companies will choose one solution over the other? I think that discussion of this optimization problem, and the different sollutions, would be a useful addition if not to this page then to the one on tazes, SR

It depends on the shape of the demand curve. If the demand curve is such that x% increase in price will always cause x% drop in sales, then it doesn't matter what the company does: it will always have its profits decreased by the full tax rate. If the drop in demand is bigger than the rise in price, then the company should maintain the price and absorb the tax. If the drop in demand is smaller than the price increase, then the company should slap the tax onto the price. If the demand curve is not linear, then an intermediate solution will be optimal. If you knew the precise formula of the demand curve, you could find the optimal solution using calculus. AxelBoldt

See the new discussion linked at the bottom about taxes and subsidies. Hopefully that should answer all questions. jrincayc

This is a useful application of S&D theory which is covered in every intro micro text book I've seen. The full answer to your question can be found on the taxation page under "economics of taxation". See this diagram [1] for a graphical representation of the effect. The short answer is that who bears the greatest share of the tax depends on the elasticity of supply/demand. The party which is the least responsive to price changes (ie more elastic) will pay a greater share of the tax. Psychobabble 01:06, 23 Nov 2004 (UTC)

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I tried to add the function of buyers' and sellers' motivation, but I it didn't look as good as the mechanistic thing, so I reverted my own changes. But I still think we should mention why increased demand tends to raise price. Just in case someone from a socialist country wants to understand why the Free World's economy prospers. --Ed Poor

Basically, the increased demand creates an oppertunity for profit, since there will be people who want the good, but are unable to buy it for an amount that is above the market price. Since sellers can sell to some people for an amount above the market price, they make more money than selling at the market price, so it happens. This then causes the market price to increase. Jrincayc 16:22 25 May 2003 (UTC)

*cough* Enron, Microsoft ... boom & bust ... *cough* could we have economic NPOV around here?

What are you talking about? I can't find enron, microsoft, boom & bust anywhere on the page. jrincayc

The above anon appears to think that a critique of corporate capitalism is required for NPOV. It isn't, but Ed Poor's account of his frustrating attempt to consider what determines the behaviour of buyers and sellers suggests to me that we could kill two birds with one stone, here: wouldn't it be more encyclopaedic to append a brief reference to the rival 'cost of production' account of price formation [2], which would also bring into view one account of how buyers' and sellers' dispositions might be formed? Answers to that critique would then strengthen the article further. Adhib 16:02, 15 Dec 2004 (UTC)

For want of feedback on this suggestion, I have added the reference to the bottom of the main article, for readers to pursue independently of the article. However, I still think this topic could be immensely enriched if a rival account was used to throw S&D's strengths and weaknesses into relief. Adhib 20:24, 19 Apr 2005 (UTC)

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Can there be some discussion of price signals, and how they might cause violations of supply and demand? E.g. if price increases, I might see this as a signal that price is going to jump higher, and therefore I should buy now, while it's still low. Especially as regards speculation (as opposed to simple consumption of the good) this is an important phenomenon that drives boom/bust bubbles (e.g., Pets.com stock went up 20 points! Buy! buy!) and ought to be discussed. Unfortunately my knowledge of economics is nearly zilch and I am not the person to do this... Graft 13:38 24 Jun 2003 (UTC)

So far as supply and demand is conserned, this is basically just a change in the demand curve. However, discussion of the above would probably be pretty interesting in a different article. Jrincayc 23:48 29 Jun 2003 (UTC)

Nyeh... i think it's a bit of a dodge to call it a change in the demand curve when the change is based on rate of change of price... Doesn't supply and demand generally assume the demand curve is fixed for a given product?

Anyway, what article do you think this belongs in? Graft 22:54 30 Jun 2003 (UTC)

Supply and demand generally assumes that the demand curve is based on huge numbers of variables including expected future value, prices of other products, ... and so it is only fixed when everything else stays the same. As for a real answer to your question either someone else will have to answer, or I will have to think about it more. Jrincayc 02:26 1 Jul 2003 (UTC)

Graft introduces a very interesting question. I agree with Jrincayc that price signals do not violate any principles of supply and demand, and the basic result is a shift in the demand curve. But I think we can all agree with Graft that there is much more to it than that. It introduces elements of uncertainty theory and expectation theory. Some might even argue that it is best dealt with using game theory. This is a very complex issue and far beyond the present Wikipedea. If anyone wants to look into it further, you could start with The Analytics of Uncertainty and Information (1994) in the Cambridge Surveys of Economic Literature series, Cambridge University Press. I would be very interested is reading any Wiki article that results from this discussion. mydogategodshat 05:39, 22 Sep 2003 (UTC)

error?

I think I have discovered an error in the entry for Supply and Demand.

The text reads: When the suppliers' costs change the supply curve will shift. For example, if someone invents a better way of growing wheat, then the amount of wheat that can be grown for a given price will increase. This creates a shift from a original supply curve S0 to a new lower supply curve S1 - a decrease in supply.

The curve does indeed shift "down" (or indeed rightward) but this indicates an increase in supply, not a decrease. For a given price a supplier will be willing and able to produce more quantity, and also the equilibrium quantity is higher.

Or am I missing a massive point / taking too much Grade A crack? loz

Agreed. I flipped them. Jrincayc 13:26, 27 May 2004 (UTC)

Now the section says:

This raises the equilibrium quantity from Q0 to the higher Q1. In this situation, we say that there has been an increase in demand which has caused an extension in supply.

Conversely, if the demand decreases, the opposite happens. If the demand starts at D1, and then decreases to D0, the price will decrease and the quantity supplied will decrease - a contraction in demand.

Should it be extension in demand and contraction in demand, or extension in supply and contraction in supply? The demand is changing, and causing the price to change, which causes the quantity supplied to change. What is the proper terminology here? (I think at least one of the things above is wrong. Jrincayc 02:05, 27 Jul 2004 (UTC)

I had never heard the terms extension or contraction used like this, but to be consistent, if increase in the demand curve causes an extension in supply, the next paragraph referring to a decrease in the demand curve should be a contraction in supply. I made the change. - Taxman 11:51, Jul 27, 2004 (UTC)

I revised it to describe the curves shifting up and down as well as left and right. The comment at the end should probably be revised.Zengief

Elasticity

hmm, I'm stuck here. I don't have a textbook in front of me but I thought that when thinking of demand and supply functions as continuous functions that the elasticity was the first derivative of the function with respect to the variable in question. That would be the slope with respect to that variable. But looking at Elasticity (economics), shows that in the discrete formulation, that slope does not equal the elasticity. Is this just a question of the difference between the continuous approximation and the discrete formulation of demand and supply functions? Because if I think about the discrete example, its not the slope that matters its the change in slope, which would be akin to the second derivative in the continuous case. What gives? - Taxman 17:19, Jun 19, 2004 (UTC)

Not quite the first derivative. It is the percentage change of quantity over the percentage change in the price. If you think about a function with constant slope, the elasticity will be changing over the graph. For example, with a demand function 10 - x, at quantity 1 to 2, and price 9 to 8, the elasticity is ((1-2)/2)/((9-8)/8) = -4.4, but at quantity 8 to 9, and price 2 to 1, the elasticity is ((8-9)/9)/((2-1)/1) = -0.11. So elasticity is not slope. A constant elasticity curve is of the form $A*price^{elasticity}=quantity$.

So this was incorrect: Using a representation of demand and supply as continuous functions, mathematically the elasticity is the first derivative of a function with respect to the variable in question. So the price elasticity of demand is the derivative of the demand function with respect to price. Also the income elasticity of demand is the derivative of the demand function with repect to income, when the demand function is seen to include income as one of its components. Jrincayc 02:42, 20 Jun 2004 (UTC)

Ok, that may be, but you're still thinking of the discrete formulation. In the limit as delta t -> 0, the % change/% change turns into the derivative I think. And if I recall correctly that is the way I learned it in my economics classes. In any case the discrete formulation in the article is fine, but I attempted to generalize what you had written. Your edits left the article to only apply to price elasticity. Income elasticity represents a shift in the demand curve. I made those edits, but now the section is choppy. I'll try to fix it, or you can, but please make sure the intro stays general for all types of elasticity that would apply to supply and demand. We need to also mention cross elasticity of demand I would think, which would warrant at least a mention of complement and substitute goods and how those effect supply and demand. Otherwise, I think the article is very close to featured status. - Taxman 16:26, Jun 21, 2004 (UTC)

As the percentage change gets smaller, ${\frac {x/{\triangle x}}{y/{\triangle y}}}\rightarrow {\frac {x}{y}}{\frac {dy}{dx}}$ which is different from ${\frac {dy}{dx}}$. So, it is still not the derivative. The new elasticity section looks pretty good. Jrincayc 02:31, 22 Jun 2004 (UTC)

I did that and now the section doesn't seem as choppy anyway to me. I think the section meets or exceeds what I was originally looking for. The last thing that would make the article great is if the oversupply diagram could have arrows on it on both sides pointing towards the equilibrium point. A second diagram with that next to the oversupply diagram would be even clearer. This would clarify the discussion of being away from the equilibrium and moving towards it, I think at least. - Taxman 18:11, Jun 21, 2004 (UTC)

How about DELETED IMAGE? Jrincayc 02:54, 23 Jun 2004 (UTC)

I was thinking more from (P1,Qd) to (P,Q) and from (P1,Qs) also to (P,Q), showing both the quantity demanded and the quantity supplied approaching the equilibrium value as the price reduces. Maybe for clarity the arrow should be just adjacent to the line between those two points in each case. - Taxman 16:33, Jun 23, 2004 (UTC)

Okay: (reload the page if need be). Jrincayc 03:20, 24 Jun 2004 (UTC)

Looks good to me. Put that right next to the oversupply diagram and I think it will be good. - Taxman 12:10, Jun 24, 2004 (UTC)

Ok, now I'm just being picky, two more arrows showing the oversupply reducing to the equilibrium for supply would make it even better I'd think. Right above the oversupply arrows. - Taxman 16:34, Jun 24, 2004 (UTC)

Colored images

How about colored images instead? E.g. like this:

File:Simple supply and demand color.png

Or would this only make things worse, for those with b/w monitors? ;) - Fredrik | talk 13:20, 24 Jun 2004 (UTC)

To me, those without color support are not a reason to not make an improvement. The color does make them easier to see. - Taxman 16:34, Jun 24, 2004 (UTC)

It seems an improvement to me, both in clarity and general eye-candyness. — Matt 23:40, 28 Jun 2004 (UTC)

I also prefer to see some colour. Just one caveat: When labour economics was a candidate for Feature Article status, it started with colour diagrams, but we had to remove the colour because there was an objection. mydogategodshat 02:59, 29 Jun 2004 (UTC)

Some people will object either way. Best thing to do is to have the color diagram but have one of the lines have dashes in it so that even if it was printed b+w, the distinction could still be made. - Taxman 11:57, Jun 29, 2004 (UTC)

There's something to be said for color, but not the legend as shown here. You have to keep referring to the bottom, it's actually more confusing. Better to use supply and demand, on the graph itself - as used in the article now. As far as dashes, etc - there's a standard in economics education, it's better to get people used to that. flux.books 14:01, 11 February 2006 (UTC)

Getting Supply and Demand to Featured Article Level

Here is the discussion from the first attempt at getting the article to featured level:

First Attempt

Self nomination. This article is probably one of the most linked economics article, and I believe it to be high quality. Jrincayc 02:14, 17 Jun 2004 (UTC)

• object, the section on elasticity is fairly central to supply and demand theory, and so far I have added only a section heading. Other than that I think it is a pretty good article. I will try to add at least a start at the elasticity section, which may be a bit of a challenge since the Elasticity (economics) article is not all that well developed. - Taxman 17:35, Jun 18, 2004 (UTC)
  • I edited (err, mostly rewrote) the section on elasticity in the article. Take a look at it. Jrincayc 21:13, 20 Jun 2004 (UTC)
    • Yes, I mostly like those changes, needs just a bit more, see Talk:Supply and demand#Elasticity I think it just needs a diagram showing movement towards the equilibrium point which is pretty central to market economics and supply and demand theory. I fully support. - Taxman 16:31, Jun 21, 2004 (UTC)
• Object. 1) Some of the writing on the graphs is really hard to read; the font needs to be a bit larger, or something. 2) The graphs could also benefit from being in colour (seven black and white graphs need livening up a bit, and colour would add to the clarity, rather than using different line styles). 3) The graphs could also do with some copyright information; are they PD, GFDL, Fair Use, etc? 4) I don't understand half the arrows on the third graph. 5) The fourth graph has a stray pixel floating in the middle of it (*cough* nitpicking)...etc. Executive summary: I'm not so keen on the illustrations ;-) — Matt 21:22, 24 Jun 2004 (UTC)
  • 3) GFDL. Feel free to upload new versions. I may get around to uploading new versions later. Jrincayc 02:09, 25 Jun 2004 (UTC)
  • I've started working on new versions, I have one for the first image in the set here. Fredrik | talk 02:12, 25 Jun 2004 (UTC)
    • That's spot on, cheers. — Matt 02:13, 25 Jun 2004 (UTC)
• There are several supply and demand topics in most intro micro textbooks that are not included. They are: the detrminants of demand; the determinants of supply, construction of a demand curve from a demand schedule, construction of a supply curve from a long run average/marginal cost curve, and the distinction between the movment of a demand curve and movement along a demand curve. Intermediate micro textbooks include compensated demand curves. My question is, "Should we include these topics?" They are all very important topics, but their inclusion might make the article too long. Any comments? mydogategodshat 04:11, 25 Jun 2004 (UTC)
  • Feel free to add any of that, but to me, this article should be aimed at the introductory level and any more advanced topics should be mentioned and summarized, but point to the more advanced article. Construction of the curves (more than is already in the discrete example) and compensated demand curves should clearly only have separate articles. Movement along vs. shifts in the curves is nearly already covered, just some clairifcation on the distinction would be good. This article does not need to be an entire article on microeconomics - Taxman 14:11, Jun 25, 2004 (UTC)
• Object. I like this article and the subject matter, but (like many articles) it needs a lot of work; more concise writing, better layout, and more extensive cross-referencing. Specifically:
• Wikification: no red links on the first screen or in the intro, please. A few more links to other related economics, sociology, and philsophy articles would be useful, and could help make the article more concise.
  • What did you have in mind? The article has hundreds of links to other economics articles. It is also in the category economics and has the admittedly awkward styleboxes at the bottom, all of which are designed to link the reader to other realated topics. What sociology of philosphy articles would help if they were linked to? I can't think of any.
    • 28 links, actually, + 6 new links in the 'see also' secion. (-: That's good, but for such a central concept -- not only in economics, but as a societal meme -- a hundred might be better. For instance, a history of the theory should link to the great philosophers and economists who hashed out the first versions of S&D.
• Better use of bold and italics can help elucidate new concepts break up long paragraphs.
  • Done, where possible. (Lovely. Getting easier to read. Now it's easier to comment on content! +sj+)
• Layout & Format: This is hard to read!
  • The whole article? If so, then it may be because you are not familiar enough with the subject. If in specific sections, where?
    • The mark of a great piece of science writing is hardly a prerequisite of familiarity with the subject. In this case, however, it is more the casual stringing together of S&D ideas without narrative arc, rather than the complexity of the subject matter, that makes it difficult to read.
• More subsections and more concise paragraphs will help.
  • Again, where? There is only one subsection after the intro that contains more than one concept and that is the elasticity section. I'm not sure breaking that up would better it.
    • Perhaps I should say, "better use of subsections". There don't need to be more than 4 or 5 major sections to the article; some of the sections could be dropped down a level, to clarify what is central and what is explication. Also, slightly more content within major sections, providing more context and greater parallelism with other sections, would help.
• The double-navtable at the end of the article feels heavy and out of place (after the external links would be better, or right-aligned so text can flow by it), and the second table takes up way too much space. Try to combine the two into a single set of navlinks, with a coherent style.
  • Those are the standard economics navtables, I suppose they could be removed and leave only the category link. But economics categories are not yet well developed.
    • Well, double-navtables should be avoided. It's a matter of layout, not content; almost all of the links from one of those navtables are in the "see also" section; that on could be done away with. And the other table could be turned into a borderless div at the end, more in line with the look of the rest of the page, or a right-floating set of links at the top of the article. +sj+
• Images should be smaller, but with large crisp text (current text size is fine; make crisper). Text should wrap around the images. Add image alt text. Use images to improve layout, not to disrupt it; label images and refer to "Image 2" rather than inserting an image as its own paragraph. A bit of color wouldn't hurt, either; say 1 or 2 small non-graph images somewhat related to supply and demand added near the start and end of the article.
  • Good ideas, others seem to be working on that.
• Cross references: only one external link for such a central concept? 8-10 seems more appropriate.
  • I'll look for more.
• Content: Use shorter and clearer examples.
  • What did you have in mind? The discrete example is central to the buildup of supply and demand curves and how they actually work. Shortening or removing it would weaken the article.
    • The discrete example, if you will excuse my saying so, could be improved. Firstly, it should explain clearly what it means to be "at a market" -- why doesn't someone buy a sack at $12 as soon as it is offered? why isn't the set of buyers & sellers maximizing the number of transactions made? Secondly, it uses a discrete model but doesn't explain that the S&D equilibrium changes (discretely) after each purchase in such a model. If one sack is sold at a time, then the equilibrium price of the 2d sack will be different...
• Unify use of "dollars" and "$"; "$24 dollars" is redundant.
  • Done. - Taxman 00:03, Jun 26, 2004 (UTC)
• +sj+ 05:22, 25 Jun 2004 (UTC)
  • Thanks for the quick responses! FAC is one of the few boundary-condition ways of maintaining standards across the project; as a result some of the standard concerns here may seem petty in comparison with the great effort that goes into the content of a fine article, but they are important.
• Please add history of the idea, competing theories of default allocation, and further explanation of perfect competition (definition/link to "commodity" & indistinguishable goods, perfect information, supply/demand stable over the period of time required for equilibration). +sj+
• Definition of "supply" needs work -- by the definition you list (long-run cost) supply should jump steeply from 0 to infinity around the long-run cost of production. Why, if a company can produce 1 million chips for $1 each, would they not produce as many as the market will buy? +sj+
  • Long run cost only jumps steeply from 0 to infinity if all the input goods also do that. All the input goods only jump steeply from 0 to infinity if all the input input goods do. ... Since at some point, the earth is finite (ditto for the universe) ultimatly some of the input goods are going to have upward sloping supply curves, so long run supply curves tend to be upward sloping, not completely elastic. Jrincayc 13:21, 27 Jun 2004 (UTC)

Could someone summarize any remaining objections, if there are any. I have lost track. mydogategodshat 20:28, 27 Jun 2004 (UTC)

Remaining Work

I think that the only remaining work from the above is working on the history section (I just started one, but I don't know that much about the topic), and working on the diagrams (which Fredrik is working on). Is there anything else that needs to be done before this is resubmitted to featured articles? Jrincayc 15:56, 4 Jul 2004 (UTC)

mydogategodshat had a number of comments that he never followed up on and seemed to have lost track of. He mentioned many topics in economics texts are not covered in the article, including: "the detrminants of demand; the determinants of supply, construction of a demand curve from a demand schedule, construction of a supply curve from a long run average/marginal cost curve, and the distinction between the movment of a demand curve and movement along a demand curve. Intermediate micro textbooks include compensated demand curves." -- I felt that some of these were already covered and others were not appropriate for the article. As noted above, this article does not need to be an entire microeconomics article. But mention of these concepts with summaries and links to the full articles on them could make the article more comprehensive. Taxman 22:51, Jul 5, 2004 (UTC)

On your advice, I decided not to go into these topics in detail. Instead I added one sentence on the likely determinants of demand and one on the typical determinants of supply. I also linked the idea of demand to demand schedule and to demand curve. I mentioned the connection between costs and supply. I did not include compensated demand curves feeling that they are too advanced for an introductory article. I then edited the article with the aim of making it more understandable to the non-economist. For now that is all I have time for because I am working on strategic management. mydogategodshat 17:57, 29 Jul 2004 (UTC)

Other suggestions for improvement (summarized from above) are:

• better transitions between sections and how they fit in ("narrative arc")
• less major subsections. drop some of the subtopics down a level to group ideas properly
• removal of the double navtable at the end and/or combination into one
• more external links to standard sources, perhaps a bibliography of standard works
• improvements to the discrete example for clarity and correctness (what does it mean to be "at a market", ie why would the first willing person not buy at the lowest price any producer is willing to sell for?

- Taxman 22:51, Jul 5, 2004 (UTC)

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Hmmmm, Maybe I've found a simpler solution to my problem ;) I've added a sentence in the header Psychobabble 01:41, 22 Nov 2004 (UTC)

Diagrams wanted

I am temporarily without my graphics program and would like to add a couple of diagrams to this article. Can anyone create them for me?

I have re-read the article and now agree with the person that complained about the lack of narrative arc. (I don't know why I didn't see it before. Maybe I just needed to get away from the article for a couple of months.) I plan on restructuring the article a bit (moving some paragraphs around) and add a bit more basics. I would like to have three simple diagrams made if someone can draw them.

1. A straight line demand curve with a slope of 2:1 labeled D=100-2Q. Where it crosses the price axis please label it 100. On the line draw a small triangle indicating the rise and the run and identify them as 2 and 1 respectively.
2. A straight line supply curve with a slope of 3:1 labeled S=5+3Q. Where it crosses the price axis please label it 5. On the line draw a small triangle indicating the rise and the run and identify them as 3 and 1 respectively.
3. Combine the above supply and demand curve into one diagram. Label the demand curve D=100-2Q and label the supply curve S=5+3Q. At the pint of intersection draw a line accross to the price axis and label it 62. Also draw a line down from the equilibrium point to the quantity axis and label it 19.

You can also check my math if you wish. I did the calculations without a calculator : not a prescription for accuracy in this cerebelum.

100-2Q=5+3Q
95=5Q
19=Q
P=100-2(19)
P=62

Thanks, mydogategodshat 17:56, 12 Oct 2004 (UTC)

Boston link

The Boston link could do with updating to point to the appropriate Boston article, but I'm not sure which it is. --John 23:22, 11 May 2005 (UTC)

Error?

The article states:

Another way to view this is that the supply curve moves up and down as opposed to left and right (respectively). If the ability to produce increases as compared to a steady price, the supply shifts up (as opposed to left). If the ability to produce decreases, the supply curve shifts down (as opposed to right).

Isn't this backwards? Doesn't the supply curve shift down/right when the ability to produce increases?

Yes, you are correct, the wording was wrong. Fixing the wording makes that way of thinking counterintuitive and not very helpful I think, so I removed it. Correcting it so it says "If the ability to produce increases as compared to a steady price, the supply curve shifts down (as opposed to right)", the wording opposed is also very confusing. The paragraph also didn't make clear if it was referring to the ability to produce increasing at all prices evenly (parallel shift in the curve) or changing different for different prices (changing the slope of the curve). - Taxman ^Talk 17:32, August 18, 2005 (UTC)

Removal of text by 203.115.78.38

203.115.78.38, you seem to be removing a lot of text from the article, and you seem to be doing it with more care than the usual vandal. The article is overly long, and could probably be split into seperate pages or some such. I have no objection to you splitting the article, however, please make it clear that you are doing such in the edit summarys. Also, if you wish to make edits of that magnitude, it would greatly help if you got a user account so it is easier to discuss your changes. I have reverted your edits largely because they are removing text and because they are unexplained. Thank you. Jrincayc 14:39, 21 August 2005 (UTC)

Visualizing the kind of issues that would have come up from both sides of the negotiation table and the factors, which could have titled the decision in favour of the milk cooperatives

Pourmilk Dairies is known for its quality dairy products. It meets most of its need of milk - the basic ingredient for its products from milk cooperatives situated nearby as transportation of milk over longer distances is not possible, given the quality of transportation facilities. Pourmilk Dairies is satisfied with the quality of milk and regularity of supply of these cooperatives. However, the milk supply in the spot market lacks quality and reliability and its prices are also volatile. Pourmilk Dairies turns to spot market for meeting any deficit in supply or for selling any surplus supplies of milk. Conventionally, the major producers of dairy products in the region [including Pourmilk Dairies] and the major milk cooperatives sit down once in every year to negotiate the price of milk for the next year. Till now, the arrangement worked well. Lately the milk cooperatives have started feeling that such a pricing agreement work to their disadvantage as it does not reflect the "market-sensitiveness" for their product. The major cooperatives are, therefore demanding change in the "period of agreement" from once a year too every sixty days. Since the current projections of demand and supply of milk suggest that milk prices will go up in the near future, such a change in the period of agreement cannot be obviously liked by Pourmilk Dairies. After a round of negotiations between Pourmilk Dairies and the major milk cooperatives an agreement is reached to change in the price agreement period from annual to quarter.

How to Visualize the kind of issues that would have come up from both sides of the negotiation table and the factors, which could have titled the decision in favour of the milk cooperatives

Pourmilk Dairies is known for its quality dairy products. It meets most of its need of milk - the basic ingredient for its products from milk cooperatives situated nearby as transportation of milk over longer distances is not possible, given the quality of transportation facilities. Pourmilk Dairies is satisfied with the quality of milk and regularity of supply of these cooperatives. However, the milk supply in the spot market lacks quality and reliability and its prices are also volatile. Pourmilk Dairies turns to spot market for meeting any deficit in supply or for selling any surplus supplies of milk. Conventionally, the major producers of dairy products in the region [including Pourmilk Dairies] and the major milk cooperatives sit down once in every year to negotiate the price of milk for the next year. Till now, the arrangement worked well. Lately the milk cooperatives have started feeling that such a pricing agreement work to their disadvantage as it does not reflect the "market-sensitiveness" for their product. The major cooperatives are, therefore demanding change in the "period of agreement" from once a year too every sixty days. Since the current projections of demand and supply of milk suggest that milk prices will go up in the near future, such a change in the period of agreement cannot be obviously liked by Pourmilk Dairies. After a round of negotiations between Pourmilk Dairies and the major milk cooperatives an agreement is reached to change in the price agreement period from annual to quarter.

Software

Does supply and demand theory hold good for software?

To the extent that the assumptions of the theory hold, yes. To the extent that they don't, no. So some cases in the software markets, say game software, the assumptions may hold reasonably well if not perfectly. Others such as operating sytems they probably don't hold at all. - Taxman ^Talk 11:30, 5 November 2005 (UTC)

definitions of demand and supply

The definitions of demand and supply don't make much of a distinction between demand and quantity demanded. Demand is represented by the whole demand curve. A single point on the curve would be quantity demanded.

I haven't written that very clearly. That's why I haven't edited. If I come up with a better way to say it I will edit.

ARE YOU KIDDING ME? who wrote this article anyways?

Demand represents the quantity of goods or services consumers will buy at EVERY price level, not at a given price as stated in this article. essentially demand is refering to the demand curve and each point on that curve represents the QUANTITY of a good that consumers will DEMAND at the corresponding price level, all other variables held constant. ---this distinction really needs to be made in the definitions explaining the law of supply and the law of demand directly would probably help. the explanation is in there but not really specified or emphasized

Demand curve shifts

      "When more people want something, the quantity demanded at all prices will tend to increase. This can be referred to as an increase in demand. The increase in demand could also come from changing tastes, where the same consumers desire more of the same good than they previously did"

ok first of all, this doesn't explain increases in demand. in fact the opening statement describes only one of the factors that causes the demand curve to shift--which is number of buyers. there also needs to be a single explanation distinguishing changes in demand and quantity demanded: what makes the demand curve shift and what causes movements along the demand curve.

what's the point of including demand curve shifts with out properly explaining the determinants of those shifts?

           "An example of this would be more people suddenly wanting more coffee. This will cause the demand curve to shift from the initial curve D0 to the new curve D1"

this is a weak and vague example--If demand increases ofcourse that means people want more coffee, the question is what causes those increases?

most of these concepts are assumptions--how about adding that these assumptions will occur if all other variables are held constant. 'ceteris paribus' does that ring a bell? otherwise these statements are wrong. example: changes in the price level will cause movements along the supply curve, all other things the same

because of these discrepancies, this article does more harm than good, and also diminshes its own credibility as a valid source of information regarding supply and demand. basic concepts are left out or misconstrued, and the explanations of supply/demand conflict with other statements in the article.

I've fixed the definition of supply, which I thought was slightly inaccurate, and I've expanded on the "special cases of supply" section. I've also moved the sections about special cases of supply and demand up below their respective setions (supply and demand) to add continuity to the article. Their inclusion as something of a footnote at the end of the entry made the entire article feel a bit chopped up IMO. Jackson744 19:37, 17 February 2006 (UTC)

Well I can't even tell if this is all comments from you in this section due to the formatting, but I've removed some of the recent additions because they are speculative and aren't backed up with Wikipedia:Reliable sources. Here's my diff so the removal is clear and the material isn't lost. Copy it all into the talk page if you wish to justify it's inclusion. Your comments above are reasonably correct, but don't necessarily lead to a more understandable article. - Taxman ^Talk 22:11, 17 February 2006 (UTC)

Comparison of this article with Encyclopedia Britannica

Hello, I'm currently doing a dissertation on Wikipedia for my MSc, and I have been conducting reviews of articles in Wikipedia in comparison with Encyclopedia Britannica. I did one on this article and thought I should post the results; so that the article may be improved based on my views, and so I may receive some feedback on my opinions. I hope my observations may assist in improving the overall quality of the article. ps the tables are not appearing properly in the actual page although they look fine in the editing section. If you read it though the results are discussed anyway.

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Comparison of Supply and Demand Articles

The Wikipedia article on Supply and Demand was taken on 15/07/06 and can be found at http://en.wikipedia.org/w/index.php?title=Supply_and_demand&oldid=63304677, while the Britannica article can be found at http://www.britannica.com/eb/article-9070416. This particular topic is one in which Wikipedia’s article is a featured article, a concept we discussed earlier. Supposedly this article is among the best Wikipedia has to offer, and we shall now see if this is the case. The lengths of the featured articles tend to be longer than many of the standard entries, at least the ones we have been selecting to analyse. For this reason the topic chosen is one the author is familiar with, having studied it at degree level. This will make the analysis simpler, quicker, and more reliable to perform.

Comparing the Statistics

Source Words Spelling Grammar Misleading Factual Opinionated Omissions

Wikipedia 4814 0 5 0 0 0 0 Britannica 675 0 0 0 0 0 0

Once again we see that the Wikipedia article is considerably longer than Britannica’s. This time the article is more than 7 times longer. In all bar the grammatical errors columns, both articles are equal with zero. In the grammatical errors count, Wikipedia has five compared with Britannica’s zero. Some of the errors in Wikipedia are quite obvious and should not be in an article considered the best Wikipedia has to offer. One sentence in the article reads; “If they do not move at all then they will stay in the middle where they already are.” Errors like this are not found in a well witten document. These statistics, and Wikipedia’s grammatical errors, are only part of the story though.

Discussion of Scope

Both articles cover the topic of Supply and Demand well, both talking about the supply curve, the demand curve, the equilibrium between the two, elasticity of the supply and demand curves and other applications of elasticity such as income elasticity and cross-elasticity of demand. Wikipedia discusses special cases of the supply and demand curves, the vertical supply curve, other market forms, history of supply and demand theory, and criticism of the current theory, which is not discussed in Britannica. Wikipedia only discusses the applications of the theory and the circular relationship between production, income, and final demand.

The common material between the articles provides a good overview of the subject area. Some of Wikipedia’s extra material is again beyond the scope of the topic. Other market forms has nothing to do with this subject, the history of the theory would be better suited to a separate article, and the alternative theories discussed in the criticism of supply and demand should be at most a link to other articles. Yet again we see that Wikipedia has a greater breadth and depth of scope, but the multiple writers issue again means that there is too much in the article.

Discussion of Overall Quality

We have already noted that there are several grammatical errors in the Wikipedia article. With the exception of these mistakes the quality of writing is very good, as is the quality of writing by Britannica. Both are written in a style similar to most economic textbooks; very formal, un-opinionated and easy to understand. In terms of conciseness, Britannica wins hands down in this instance. The word count alone illustrates both how much longer Wikipedia takes to explain a point, and how much more material is covered. One specific example in this case is a worked example Wikipedia gives entitled “Supply and Demand in a 6 Person Economy”, that is 742 words long and doesn’t contribute much to the entry.

As with previous articles, Wikipedia benefits from the use of subheadings and a table of contents, giving the article the edge in terms of structure and readability. Again Britannica’s article is just the one piece of text with no subheadings to break it up. On the other hand Britannica’s entry is well ordered, to the point and better written. Wikipedia has several errors other than grammatical errors which detract from its overall quality. A couple examples of this are repetition with the definitions of supply and demand and the attempted use of an example which merely throws the word “coffee” into a sentence for no apparent reason. Also towards the end of the article, it starts to sound more disjointed with small points seemingly bolted on just for the sake of adding more content.

A final point we shall consider in this part of our discussion is the use of visual aids by Wikipedia, specifically the use of graphs to explain the concepts of supply and demand, shifts in supply and demand, and elasticity. This is something that the majority of Economics textbooks and learning resources would use to illustrate their discussions, as graphs are an integral part of the field of Economics. It is one area where Wikipedia definitely outperforms Britannica, who do not use visual aids at all. It is a useful feature of Wikipedia, that users when editing articles can also include images as part of their edits.

Conclusion

Below is the table with the final comparisons of the articles on Supply and Demand;

Factor Winner Quality of Writing Britannica Structure Britannica Accuracy Equal Breadth of Article Wikipedia Depth of Article Wikipedia Appropriate Focus Britannica

The results in the above criteria for this article are the same as with the previous articles on Pelè, although this does not mean we are reaching the same verdict. It is true that with the number of grammatical and structural errors we cannot award Wikipedia with victory in these categories. Neither article has and obvious errors. Once again we see that Wikipedia has a greater breadth and depth of discussion, but again struggles with the appropriateness of the material it covers. Overall Wikipedia’s range and detail of discussion, along with its inclusion of graphs to illustrate points makes it difficult to say which article is better. There is not much to choose between the two, and in this case, although there are great differences between the articles, neither is considered the superior. Additionally the potential of the Wikipedia article is that it could become easily the better of the two with some editing.

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Assistance

I'm writing a small section into the FairTax article (currently titled Value of used goods) that contains aspects of supply and demand in relation to the value / cost of used goods in comparison to new goods with the FairTax applied. I thought this section could use some expertise from the editors of this article. I currently do not have any references and just a brief explanation. Thank You Morphh ^(talk) 18:56, 30 September 2006 (UTC)

Serious Question

The stuff about how supply and demand would work within highly competitive markets with egoistical rational people and how reality (monopolies, oligopolies) diverts from that doesn't make sense to me. When I look at these curves and imagine everybody to give in as little as one must I only see degrees of monopoly at work there. The side that is less monopoly-like (or monopsony or whatever) gets screwed. To make it more clear: I view artificial scarce products made by scheming humans with intent as well as raw materials that are naturally scarce as having monopoly-likeliness.

What is wrong with my view? --R.H. 19:59, 19 October 2006 (UTC)