tag:blogger.com,1999:blog-6598831864333990375.post8761212030332101137..comments2023-05-08T04:01:34.561-08:00Comments on Students Who Enjoy Economic Thinking: A point of intersection?Adam Levyhttp://www.blogger.com/profile/15257124483756325652noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6598831864333990375.post-38279352405298805492009-10-13T11:36:00.875-08:002009-10-13T11:36:00.875-08:00Yes the idea of two linear functions meeting at s...Yes the idea of two linear functions meeting at some point and that determining the single clearing price for a good or service is a gross simplification of reality meant to allow those who study markets to glean information from a complex system and abstract rules or concepts. In reality, the market (and higher level economics) is not so simple. The assumptions necessary for a single market price under perfect competition are found almost nowhere in the real world. The combination of perfect information, low transaction costs and costless transition of labor and capital alone eliminate many markets from the application of this simple analysis. This concept is just another example of academic simplification that is necessary to progress students to the point that they understand a few basic concepts and can eventually introduce more complexity.Zack Boydhttps://www.blogger.com/profile/00438120642719177530noreply@blogger.comtag:blogger.com,1999:blog-6598831864333990375.post-49970631554547406932009-10-07T12:07:58.361-08:002009-10-07T12:07:58.361-08:00This wiggle room you speak of certainly exists. It...This wiggle room you speak of certainly exists. It seem the higher the degree of competition the smaller it is. Look at stocks, there is almost no wiggle room what so ever when million and million of shares are traded a day. On top of that all share are equal and perfect substitutes for each other. A share is a share is a share. But for a good such as a house the wiggle room is much larger. For starters houses are not sold as frequently as stock and a house is not a house. They are all special. While they are substitutes for each other they are not perfect substitutes and the housing market is significantly less competitive than the stock market.<br /><br />I like your observation, I have not thought of it before and it is very accurate.NewsConnectionshttps://www.blogger.com/profile/10859440957593787660noreply@blogger.com