Friday, August 7, 2009

Supply/Demand and Profits

There is talk in the webosphere about supply/demand and price. I will try profits instead.

If I make widgets for a profit then I make more widgets, take more money from buyers, their money deplets and price declines. Hence the balance between money and widgets in the inventories of buyers and makers. I the queuing model, money averages and inventory averages at each stage of the queue want to be equal. Profit, not price, in an indicator of the efficiency of inventory build up relative to other substitutable products.

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