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Quotation of the Day…

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… is from page 125 of Ronald Coase [2]’s and Ning Wang’s excellent 2012 book, How China Became Capitalist [3] (emphasis added):

The demand and supply curves are theoretical concepts; the real movers behind them are consumers and business organizations. The conventional emphasis placed on demand and supply in the economics textbook as the moving forces in the market is thus misleading, if it is accepted literally. Rather, demand and supply forces result from the continuous process of bidding and tendering between buyers and sellers, who are constantly alert to changing opportunities.

DBx: Yep. No analytical tool in all of economics – indeed, likely in all of the social sciences – is as useful as is the supply-and-demand graph. It is a thing of profound beauty and utility. But supply-and-demand graphs are useful only for telling stories about economic processes; supply and demand are not themselves the story. (The same, of course, is true for supply and demand when expressed in the form of equations rather than in the form of a graph.)

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