Economics Dictionary of ArgumentsHome
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| Equilibrium price: Equilibrium price in economics is the price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers. It represents a market balance, where there is neither a surplus nor a shortage. This price is determined by the interaction of supply and demand forces in a competitive market. See also Equilibrium, Equilibrium theory, Exchange, Price._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Equilibrium Price - Dictionary of Arguments
Rothbard III 114 Equilibrium price/Rothbard: The amount offered for sale at each price is called the supply; the amount demanded for purchase at each price is called the demand. Rothbard III 115 As long as the demand exceeds the supply at any price, buyers will continue to overbid and the price will continue to rise. The converse occurs if the price begins near its highest point. Equilibrium price/supply/demand/Rothbard: If the overbidding of buyers will drive the price up whenever the quantity demanded is greater than the quantity supplied, and the underbidding of sellers drives the price down whenever supply is greater than demand, it is evident that the price of the good will find a resting point where the quantity demanded is equal to the quantity supplied (…). Rothbard III 116 Equilibrium: The specific feature of the “clearing of the market” performed by the equilibrium price is that, at this price alone, all those buyers and sellers who are willing to make exchanges can do so. >Market/Rothbard, >Price/Rothbard. Rothbard III 120 Demand/supply: (…) as the price increases, new suppliers with higher minimum selling prices are brought into the market, while demanders with low maximum buying prices will begin to drop out. Equilibrium price: (…) once the zone of intersection of the supply and demand curves has been determined, it is the buyers and sellers at the margin - in the area of the equilibrium point - that determine what the equilibrium price and the quantity exchanged will be. Rothbard III 132 Elasticity/speculation/demand: (…) the new demand curve, including anticipatory forecasting of the equilibrium price, is [more flattened], ((s)starting at a lower price). It is clear that such anticipations render the demand curve far more elastic, since more will be bought at the lower price and less at the higher. Rothbard III 133 Thus, the introduction of exchange-value can restrict demand above the anticipated equilibrium price and increase it below that price, although the final demand - to consume at the - equilibrium price will remain the same. >Speculation/Rothbard. Erroneous speculation: (…) we have assumed that this speculative supply and demand, this anticipating of the equilibrium price, has been correct, and we have seen that these correct anticipations have hastened the establishment of equilibrium. Suppose, however, that most of these expectations are erroneous. Suppose, for example, that the demanders tend to assume that the equilibrium price will be lower than it actually is. Does this change the equilibrium price or obstruct the passage to that price? Solution: As soon as the price settles at ((s) around the equilibirum price), the demanders see that shortages develop at this price, that they would like to buy more than is available, and the overbidding of the demanders raises the price again to the genuine equilibrium price. The same process of revelation of error occurs in the case of errors of anticipation by suppliers, and thus the forces of the market tend inexorably toward the establishment of the genuine equilibrium price, undistorted by speculative errors, which tend to reveal themselves and be eliminated. >Utility/Rothbard. Rothbard III 142 Exchange: exchanges will (…) take place in a quantity and at a final price determined by the intersection of the new combination of supply and demand schedules. This may set a different quantity of exchanges at the old equilibrium price or at a new price, depending on their specific content. Or it may happen that the new combination of schedules - in the new period of time - will be identical with the old and therefore set the same quantity of exchanges and the same price as on the old market. >Stock keeping/Rothbard, >Utility/Rothbard. Equilibrium: The market is always tending quickly toward its equilibrium position, and the wider the market is, and the better the communication among its participants, the more quickly will this position be established for any set of schedules. >Price/Rothbard, >Demand/Rothbard, >Supply/Rothbard._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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> Counter arguments against Rothbard
> Counter arguments in relation to Equilibrium Price
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