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  1. #31
    Registered User CanuckBruh's Avatar
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    Originally Posted by stealth_swimmer View Post
    A price ceiling above the equilibrium price doesn't force anything - it has no effect.
    I made a poor choice in wording by saying "force". I was typing up an essay due on Tuesday while simultaneously cramming for the last of my midterms on Monday (with another paper due on Wednesday). I'm a legitimate phucking potato with the amount of sleep I've gotten this week, but you're definitely right about it not forcing anything.

    Originally Posted by JustBulk View Post
    Lol. As mentioned, a price ceiling above the equilibrium price has no effect.
    OP asked for an explanation as to which would discourage demand and why. I mentioned a price floor above equilibrium would achieve that and why. To help him fully understand the difference I stated why the ceiling wouldn't discourage demand because it'd allow for competition in the market. My only mistake was using the word force.

    Originally Posted by JustBulk View Post
    Good luck with your econs goals in 2013, you're doomed.

    CanuckBruh obviously doesnt have any.
    Your ability to take the wrong choice in a single word I made while dismissing everything else I said, and then somehow trying to equate it to my not knowing anything in Economics or common sense is strong.

    Teach me your ways of rationale, brah!
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  2. #32
    Registered User mikeditka's Avatar
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    Lol at the thought that all goods are "priced at equilibrium"
    Prices may be searching for equilibrium, but they rarely find it exactly.

    Lol at the thought of Econ 101 graphs being applicable to predict say the global steel industry...EGO runs big business brahs

    Explain to me how Lakshmi Mittal runs his business on Econ 101 concepts...Ego runs business
    I knew a brilliant Econ prof once. He said after years and years he realized,"Essentially there really is no long-term, it's all the short-term. Markets don't do things, people do things."

    The basic concepts are VERY IMPORTANT concepts to grasp...listen to the other guys for the purpose of passing your test OP. Make your A's.

    But realize using mathematics to predict human behavior is a joke IRL realize there are no vacuum-tube widgets. Items vary immensely in quality, brand loyalty, etc

    "Markets don't do things. People do things."
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  3. #33
    I Am Teh Lolrus stealth_swimmer's Avatar
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    Originally Posted by Conspiracybrah View Post
    This is mostly true, but you have to remember that not everyone has the knowledge of the optimum price point which means that it could have an effect on those ignorant businesses. If you would have looked at it from a pure-equilibrium perspective, you'd be completely correct.
    True.

    Originally Posted by mikeditka View Post
    So if the equilibrium price of a car is $35k..and we set a price ceiling at $36k. The govt says you can no longer charge more than $36k for a car.

    Brb SL63 AMG is $36k
    Brb Gallardo Superleggera is $36k

    Demand is unaffected?!

    I know the response will be "strawman, no no no...it has to be in a vacuum hypothetical situation, etc"

    What I'm saying is:
    They tell you in Econ 101 that price ceilings below equilibrium are BINDING (this has a variety of effects.)

    But, then they tell you a price ceiling above equilibrium price is NON-BINDING and has NO EFFECT.

    I'm saying that this has almost zero application as 97% of goods are NOT homogenous, identical, hypothetical widgets.

    IRL goods differ wildly in quality.

    For instance, they will give the example of "rent controlled" apartments in Manhattan, Hong Kong, whatever as a IRL example of this whole concept.

    If the "established price" of an apartment is $2200. Price ceiling is set at $2000. (Of course they may or may not tell you that black market activity shows you the REAL equilibrium.)

    But (same example) "established price" is $2200...are there a hypothetical handful Manhattan apartments renting for $10k...now price ceiling is $2500 (ABOVE "established/equilibrium) price....yeah bros, sure, the deman for a premium apartment that rents for $10k with a private pool and shiet isn't going to go up.....right.

    Hotchickokheadnod.jpg

    The counter-argument of course with be..."no man, you're all wrong. This totally works with homogenous made-up widgets. You don't grasp a basic concept."

    CLIFFS:
    I DO grasp a basic concept...but I think it's bullshiet b/c THERE are NO homogenous widgets
    At best this concept would apply to corn/wheat/oil (which actually again all vary in quality but whatever)
    Doesn't matter if there are no homogenous goods (not all goods are widgets ), the example is about a homogenous good. It's not about various goods that are similar but have different equilibrium prices. The example is about *one* good and is assuming homogeneity.
    "...that's the great virtue of the free market, of the private market. It enables people...who hate one another...who don't speak the same language...who would fight one another if they had the chance, to cooperate economically. We were able to deal with China when China was a communist state. Even though we thought that that was a terrible arrangement, we could still cooperate. And that's what markets enable people to do. They bring freedom with them."
    - Milton Friedman
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  4. #34
    I Am Teh Lolrus stealth_swimmer's Avatar
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    Originally Posted by mikeditka View Post
    Lol at the thought that all goods are "priced at equilibrium"
    Prices may be searching for equilibrium, but they rarely find it exactly.

    Lol at the thought of Econ 101 graphs being applicable to predict say the global steel industry...EGO runs big business brahs

    Explain to me how Lakshmi Mittal runs his business on Econ 101 concepts...Ego runs business
    I knew a brilliant Econ prof once. He said after years and years he realized,"Essentially there really is no long-term, it's all the short-term. Markets don't do things, people do things."

    The basic concepts are VERY IMPORTANT concepts to grasp...listen to the other guys for the purpose of passing your test OP. Make your A's.

    But realize using mathematics to predict human behavior is a joke IRL realize there are no vacuum-tube widgets. Items vary immensely in quality, brand loyalty, etc

    "Markets don't do things. People do things."
    I think you're missing the point. The model is simply there to illustrate some points and give you practice at gaining an intuition for the *mechanics* of what's happening. Models don't necessarily explain stuff. They *illustrate* and are always a simplification. The more in depth you describe a situation, the more info you need to add, and it can get to the point where a mathematical model isn't enough to describe what's going on. However, models give us a part of the picture(and sometimes, quite a bit).

    And in actuality, the purpose of models is prediction(such as price going up or down, for example). The purpose of theory is explanation.
    "...that's the great virtue of the free market, of the private market. It enables people...who hate one another...who don't speak the same language...who would fight one another if they had the chance, to cooperate economically. We were able to deal with China when China was a communist state. Even though we thought that that was a terrible arrangement, we could still cooperate. And that's what markets enable people to do. They bring freedom with them."
    - Milton Friedman
    Reply With Quote

  5. #35
    Registered User mikeditka's Avatar
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    Originally Posted by stealth_swimmer View Post
    I think you're missing the point. The model is simply there to illustrate some points and give you practice at gaining an intuition for the *mechanics* of what's happening. Models don't necessarily explain stuff. They *illustrate* and are always a simplification. The more in depth you describe a situation, the more info you need to add, and it can get to the point where a mathematical model isn't enough to describe what's going on. However, models give us a part of the picture(and sometimes, quite a bit).

    And in actuality, the purpose of models is prediction(such as price going up or down, for example). The purpose of theory is explanation.
    I agree.
    That's why I say OP should grasp these concepts. But, there are no homogenous goods.
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