================= HES POSTING ================= A propos Marshall's Ps and Qs, you may be interested in what Allyn Young said in his lectures at the LSE (as recorded by Nicholas Kaldor) in 1928, a few months before his untimely death. (See Journal of Economic Studies, Vol. 17, 3/4, 1990, pp.35-6.) "Demand price" is the price at which a specified quantity of goods will be taken off the market. The older economists in saying that "prices are determined by supply and demand" used common concepts they themselves did not scrutinise carefully. They had in mind that p=f(s.d.), more particularly, one aspect of it -- i.e., changes in supply and demand and what effect they have on price. J.S.Mill first attempted to give precision to the notion. "Price will always be, or tend to be, at that point where supply equals demand." There he considers price not so much as f(s.d.), but rather supply and demand as functions of price (s=f(p); d=f(p)). And this is more than changing the dependent and independent variable; IT IS NOT THE SAME STATEMENT. Taking Mill's tendency statement prima facie, it is a tautology; but it really implies a generalisation about the character of supply and demand functions. Marshall then used curves to give Mill's statement greater precision. (Cournot and Jenkin (first of all) had already used curves.) Cairnes, however, favoured the older conception of supply and demand varying and so affecting price. Regarding these curves, the negatively sloping demand curve is really a generalisation from the market. It is implicit, not explicit, in Mill. Notice that Marshall violated mathematical convention by using price as the independent variable and yet measured price vertically. Contrast Cournot's curves. On Marshall's curve, demand equals the amount that will be purchased at a given price, and really means hypothetical purchases. Movement up and down the curve does not mean a change in demand. While the older economists were talking about changes in demand, with Marshall this can only be shown by shifting the whole curve..." ============ FOOTER TO HES POSTING ============ For information, send the message "info HES" to [log in to unmask]