Hello!

The situation is more clear for supply curve which is [mathematically] the
part of the marginal cost curve of the competitive firm, so MC=f(q). The
supply curve for the industry is the sum of individual curves, but as
price-takers the competitive firms already consider the price as argument
(for determing the production output).

As for the demand function situation is more complex (because in the
consumer choice models there are several goods), but the individual demand
curve for good "A" might be treated as the approximation of marginal
utility of consumption this good conditioned by substitution & welfare
effects.

Sincerely Yours,
  Dmitry Krutikov
  3/ii-2011


On Thu, 3 Feb 2011 03:31:20 +0000, Steve Horwitz  wrote:   

Folks, 

It's been a long time since I looked at this issue, so I'm going to rely
on
the wisdom of this wise crowd.  

What is the most accepted explanation for why we have the independent and
dependent variables reversed in supply and demand graphs? It came up in
class today and I gave "an" answer, but I admitted to my class that I
wasn't confident that I was correct. I also promised them I'd ask all of
you. 

So what's the consensus in HET on this issue? 

Thanks. 

Steve 

-- 

Steven Horwitz 

Charles A. Dana Professor and Chair 

Department of Economics 

St. Lawrence University 

Canton, NY 13617 

Tel (315) 229 5731 

Fax (315) 229 5819 

Email [log in to unmask] [1] 

Web: http://myslu.stlawu.edu/~shorwitz 

 

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