Friday, October 9, 2009

Price Is A Scissors

One of the ideas I always try to stress is that, while assymetric information exists in exchanges, it still takes supply AND demand to make a market. 

My favorite illustration for markets without demand was an old Calvin & Hobbes comic. Calvin had set up a booth and was selling "swift kick in the butt".  Business was terrible, and he told Hobbes he couldn't understand it.  "Everyone I know needs what I'm selling."  A clear case of supply but no demand. ***UPDATE*** (You can find it here. HT to Dr. Mark Witte at Northwestern University for the link.)

On the other side, I can think of no better example of demand without supply than this classic bit from Monty Python's Flying Circus.  Enjoy your weekend.

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