Saturday, August 7, 2010

Can economists tell the difference between supply and demand?

Seriously, how does one determine if a market transaction represents too much supply or too little demand? If the price for apples is dropping, then either people are waiting a better variety of apple which is in short supply, or they have less demand for the current variety. How do economists know? They don't, generally, unless they are apple economists, or at least agricultural economists.

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