“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” Josh Billings
Paul Samuelson (A) wrote, “the equilibrium price, i.e., the only price that can last, is that at which the amount willingly supplied and the amount willingly demanded are equal. Competitive equilibrium must be at this intersection point of supply and demand curves (Economics, 9th Ed., p. 63).” We see an example of this phenomenon in B, as iron mines with progressively more costs form an upward-sloping supply curve intersecting a Demand curve at a single point. For single-feature markets such as this one, Samuelson’s argument makes sense.
But Hypernomics researcher twins Cristina (C) and Sheila (D) (both played by my daughter, Meagan Swanson) observe dozens of prices for scores of flat screen TV models (E). Cristina, who studies Value, suspects their sustainable prices and costs rise with desired features. Sister Sheila, a Demand analyst, has a hunch that as quantities sold go up, prices and attendant costs must fall. They both agree that the markets’ multiple and frequently changing prices negate a single-point equilibrium. What takes its place?