A Humean thought experiment

by on November 29, 2005 at 7:12 am in Economics | Permalink

Let us say, just for fun, that you woke up one morning to a world where everyone else’s demand curve — except yours — slopes upward.  But it is not common knowledge that  this is the case.  What is the first oddity you would notice? 

1. The most expensive radio stations would be filled with the most ads.  The music would never come.

2. Your house would have no electricity, due to grid overload.  (Is this true?  An upward-sloping curve does not mean you will demand more at the current price.  Think of twisting the demand curve around the current point of intersection.)

3. The most transparent agents would be found wandering the streets, bereft of all wealth, the victims of corporate price hikes.

4. You would wonder why so few people were reading your blog.

5. You would check ebay and find very high prices for items with active bidding.  (Hmm…what kind of auction markets are behind the scenes for our power supply?)  (Addendum: What is the Nash equilibrium here?  Will people hold off bidding, hoping that tomorrow’s price will be higher?)

6. You would be puzzled why the Nordstrom’s sale was so empty.

7. It would take you days to notice any significant difference at all.  After a few weeks, they would call in the econometricians to solve the identification problem in the data.

How long would it take you to figure out that other peoples’ demand curves were sloping upwards?  How long would it take for society to fall apart?

Comments are open.

1 Amit Dubey November 29, 2005 at 9:17 am

I have to admit, this makes no sense to me. You consume more of one good because it is higher cost? But then what happens to substitution? The slope can only be downward sloping if we can substitute one good or service for a higher cost one.

If this is so, then society falls apart because people seek ever higher-cost activities. Before long, we’re all criminals.

But this is wierd from a psychological and physiological viewpoint. Strange things happen like a skyrocketing suicide rate (what could have a higher cost?), except amoung those who are severly depressed, who keep themselves alive because of a perceived higher cost.

But also, doesn’t an upward sloping curve suggest increasing returns from consumption? This is also strange from a psychological/physiological standpoint: we’d all eat till our stomachs explode.

2 John Kelsey November 29, 2005 at 9:27 am

At least for simple-looking upward-sloping supply curves, I think you get a couple of weird properties that an economist might notice, even if nobody else did:

a. Imposing a price ceiling below the market clearing price would result in surpluses instead of shortages. Similarly, imposing a price floor above the market clearing price would result in shortages.

b. Making some good cheaper to produce would lead to more being consumed, but also to the market price going up. Similarly, making the good more expensive to produce would lead to less being consumed, but also to the market price falling.

–John

3 Jason Briggeman November 29, 2005 at 9:48 am

Assuming that we leave demand curves flat in the financial world, I might guess that gas-station managers are the first to notice. They post their prices on large signs every day and react to changes in the local market. On the first day, every manager who raised prices from the previous day would sell more, so it’s doubtful they use that information to lower prices on the second day. A good portion will raise prices again the next day, and these stations will sell a LOT more, as word starts to spread among the resident aliens about the “great” deal down the street.

4 tadhgin November 29, 2005 at 10:21 am

Debt would rocket – people would seek out higher and higher interest rates

of course they would spend the money on dearer and dearer things.

…and seek higher and higher debt. (I live in a poor area, based on the electoral roll I get offered credit cards with 60% apr – more people would
take these up)

Things would collapse pretty rapidly.

5 Les Jones November 29, 2005 at 10:57 am

Well, you’re talking about an inflationary economy of sorts. One thing that happens in a highly inflationary economy – the kind where the price of bread is expected to increase overnight – is that people shop constantly to avoid tomorrow’s higher prices. So I’d predict ever more urgent shopping activity, along with highly speculative futures markets.

6 joshg November 29, 2005 at 11:29 am

Probably some commodity’s price would go to infinity very quickly. Once the price started rising fast enough all other goods would be unattractive by comparison. The entire earth’s supply of all of the factors of production would be diverted to production of this commodity as the price quickly rose to infinity. Then we’d all starve to death.

Possibly we’d all come to the conclusion that prices are no longer a good way to allocate resources. We’d all fend for ourselves in a post-apocalyptic Mad Max world. The only problem is, we’d prefer to wrestle a bear for his fish than catch one ourselves. Then we’d all starve to death.

7 Les Jones November 29, 2005 at 11:52 am

John, perhaps you’re right. People might wait until the price increases if paying high prices is what actually creates satisfaction in this Bizarro world.

On the other hand, if people know the price will soon increase maybe they’ll get the jump and get it for a better price and get the satisfaction of owning something that’s worth a lot, even if they didn’t pay that much for it.

The question is whether our Bizarro world residents are motivated by price or value. In your Bizarro world everyone is Bizarro Paris Hilton. In my Bizarro world everyone is Bizarro Warren Buffett.

8 Andrew Edwards November 29, 2005 at 12:55 pm

Nothing happens.

The supply curve starts sloping downwards, meaning equilibrium stays in roughly the same place. This is because the real-world upwards-sloping supply curve is a reflection of the producer’s downwards-sloping demand curve for inputs. So as soon as manufacturers get to scale (and hit the currently up-sloping bit of their supply curve), we find an equilibrium.

Real-world inputs become more scarce the more a manufacturer produces, raising their price, meaning the real-world producer requires a higher price to justify the higher volume. If in bizzarro-world he demands more inputs as their price rises, then his supply curve should flip.

9 conchis November 29, 2005 at 1:05 pm

Everyone with upward sloping demand curves would turn up to their jobs the next day and ask if they can work overtime.

10 dsquared November 29, 2005 at 1:37 pm

This is just equivalent to saying “imagine that all goods became bads and vice versa”.

11 dsquared November 29, 2005 at 1:42 pm

(obviously I mean an non-monotonic function. In any case, I don’t agree that econometricians would be able to “solve the identification problem”). Since money wuld have a negative value, I don’t see how there would be a valid numeraire.

12 Scott Wood November 29, 2005 at 10:31 pm

It would seem that all of the production of any given good would go to at most one person, as it would be most profitable for suppliers to sell all of their stock to the one person who values the entire production of that one good most highly. –sw

13 Laurel November 30, 2005 at 1:24 am

An individual’s resources are finite and an individual’s demand curve cannot increase without bounds. Instead it will rise until the price equals the person’s wealth: beyond that point the person cannot buy _any_ of a good and the individual’s demand for that good falls to zero.

The aggregate result then depends on the relationship between the (strange) demand curve and the usual supply curve, which can pass above, below or multiply intersect the demand curve. AZ describes this very well.

In any case, under these circumstances you would notice almost immediately: the tipoff would be that friends and co-workers had no money (e.g., “No Starbuck’s today, please!”). Stopping by the local convenience store, you would find the clerks in a panic because no one was buying _anything_.

14 Mike Linksvayer November 30, 2005 at 12:05 pm

Long queues outside homeopathic clinics.

15 Gustavo Lacerda November 30, 2005 at 3:32 pm

>
Sellers would set prices lower, in order to maximize profit.

>
Why?

Do people in this counterfactual world consider ad-listening costs? Does this factor in the price considered in the demand curve?

None of those predictions make sense to me.

16 Robert Book December 1, 2005 at 3:58 am

The problem with this thought experiment is that even if every individual (or all but one) have an upward-sloping individual demand curve, the market demand curve will still be downward-sloping. The reason is, when people who seek higher prices will run out of money faster, thus buying fewer units. So higher prices still lead to fewer units sold — i.e., a downward-sloping market demand curve.

This is, of course, assuming that people still have finite budget constraints. If people don’t have budget constraints, then essentially every good is either free (if its supply can be increased through production) or subject to the tragedy of the commons (if its supply is inherently limited).

17 javed May 15, 2006 at 5:40 am

Differentiate between the following terms:

Nominal GDP and real GDP
Budget deficit and Budget surplus

18 gill July 10, 2007 at 10:37 pm

wanyamin 07年7月11日

wow gold
wow gold
powerleveling
powerleveling
wow power leveling
wow power leveling
wow powerleveling
wow powerleveling
world of warcraft powerleveling
world of warcraft powerleveling
world of warcraft power leveling
world of warcraft power leveling
cheap wow powerleveling
cheap wow powerleveling
cheap wow power leveling
cheap wow power leveling
hongkong hotel
hongkong hotel
beijing tour
beijing tour

门禁
集团电话
集团电话
光盘制作
光盘印刷
光盘印刷
红外测温仪
红外测温仪
超声波测厚仪
超声波测厚仪
超声波探伤仪
超声波探伤仪
频闪仪
频闪仪
涂层测厚仪
涂层测厚仪
电火花检测仪
电火花检测仪
搬家公司
搬家公司
北京搬家公司
网站设计
网站设计
多媒体

google排名
wow gold
翻译公司
翻译公司
上海翻译公司
上海翻译公司
北京翻译公司
北京翻译公司
货架
货架
货架
猎头
猎头
软件测试工程师
软件测试工程师
软件测试
软件测试
软件测试培训
软件测试培训
仓库
仓库
仓库出租
仓库出租
物流园区
物流园区

摆闸
痤疮
痤疮
色斑
色斑
黄褐斑
黄褐斑
青春痘
青春痘
口腔医生
口腔医生
口腔
口腔
口腔医院
口腔医院
口腔科
口腔科
三星集团电话机
呼叫中心
电话交换机
交换机
呼叫中心
测厚仪
测温仪
停车场
道闸

cheap Silkroad gold
cheap Silkroad gold
Silkroad gold
Silkroad gold
Silkroad Online gold
Silkroad Online gold
sro gold
sro gold
Archlord gold
Archlord gold
cheap Archlord gold
cheap Archlord gold
Archlord Online gold
Archlord Online gold
buy cheap Archlord gold
buy cheap Archlord gold
Dofus kamas
Dofus kamas
cheap Dofus kamas
cheap Dofus kamas
Dofus gold
Dofus gold
Dofus money
Dofus money
Rappelz Rupees
Rappelz Rupees
Rappelz gold
Rappelz gold
cheap Rappelz Rupees
cheap Rappelz Rupees

19 asdd July 10, 2007 at 11:30 pm

wulvyou 07年7月11日
google排名
google排名
wow gold
wow gold
powerleveling
powerleveling
wow powerleveling
wow powerleveling
wow power leveling
wow power leveling
world of warcraft powerleveling
world of warcraft powerleveling
wow power leveling
wow power leveling
cheap wow powerleveling
cheap wow powerleveling
powerleveling wow
hongkong hotel
hongkong hotel
beijing tour
beijing tour
翻译公司
翻译公司
上海翻译公司
上海翻译公司
北京翻译公司
北京翻译公司
门禁

集团电话
集团电话
货架
货架
货架
拓展训练
拓展
拓展培训
google排名
条码打印机
机票
搬家公司
北京搬家公司
仓库
仓库
仓库出租
仓库出租
物流园区
物流园区
条码打印机
猎头
猎头
虚拟主机
红外测温仪
红外测温仪
超声波测厚仪
超声波测厚仪
超声波探伤仪
超声波探伤仪

频闪仪
频闪仪
涂层测厚仪
涂层测厚仪
电火花检测仪
电火花检测仪
beijing
beijing
china tour
china tour
great wall
beijing travel
beijing travel
搬家
搬家公司
搬家公司
北京搬家公司
北京搬家公司

摆闸
痤疮
痤疮
色斑
色斑
黄褐斑
黄褐斑
青春痘
青春痘
口腔医生
口腔医生
口腔
口腔
口腔医院
口腔医院
口腔科
口腔科
三星集团电话机
呼叫中心
电话交换机
交换机
呼叫中心
测厚仪
测温仪
停车场
道闸

20 hyangel July 11, 2007 at 1:42 am

houyuping 07年7月11日

google排名
google排名
wow gold
wow gold
powerleveling
powerleveling
wow powerleveling
wow powerleveling
wow power leveling
wow power leveling
power leveling
power leveling
wow power level
wow power level
Ddo plat
Ddo plat
FFXI Gil
FFXI Gil
GW Gold
GW Gold
GW Power Leveling
GW Power Leveling
RS Gold
RS Gold

RS Power Leveling
RS Power Leveling
Lotro Gold
Lotro Gold
Lotro Power leveling
Lotro Power leveling
翻译公司
翻译公司
上海翻译公司
上海翻译公司
北京翻译公司
北京翻译公司
监控
货架
货架
货架
涂层测厚仪
涂层测厚仪
翻译公司
仓库
仓库
仓库出租
仓库出租
物流园区
物流园区
红外测温仪
红外测温仪

超声波测厚仪
超声波测厚仪
超声波探伤仪
超声波探伤仪
频闪仪
频闪仪
涂层测厚仪
涂层测厚仪
电火花检测仪
电火花检测仪
google排名
门禁
门禁
门禁系统
门禁系统
搬家
搬家公司
北京搬家公司
光盘制作
光盘印刷
光盘印刷
搬家公司
激光打标机
搬家公司
北京搬家公司
hongkong hotel
hongkong hotel
beijing tour
beijing tour
集团电话
集团电话
wow power leveling
wow power leveling
wow powerleveling
wow powerleveling
wow power level
wow power level
china tour
china tour
青春痘
青春痘

摆闸
痤疮
痤疮
色斑
色斑
黄褐斑
黄褐斑
青春痘
青春痘
口腔医生
口腔医生
口腔
口腔
口腔医院
口腔医院
口腔科
口腔科
三星集团电话机
呼叫中心
电话交换机
交换机
呼叫中心
测厚仪
测温仪
停车场
道闸

21 xdrs July 15, 2007 at 9:58 pm

liying 07年7月16日

google排名
google排名
wow gold
wow gold
wow gold
wow gold
powerleveling
powerleveling
wow power leveling
wow power leveling
wow powerleveling
wow powerleveling
world of warcraft powerleveling
world of warcraft powerleveling
world of warcraft power leveling
world of warcraft power leveling
hongkong hotel
hongkong hotel
beijing tour
beijing tour
翻译公司
翻译公司
上海翻译公司
上海翻译公司
门禁
北京翻译公司
北京翻译公司
google排名

集团电话
集团电话
仓库
仓库
仓库出租
仓库出租
物流园区
物流园区
搬家公司
搬家公司
北京搬家公司
搬家
搬家公司
搬家公司
北京搬家公司
北京搬家公司
beijing
beijing
china tour
china tour
great wall
beijing travel
beijing travel
china tour
china tour
多媒体
货架
货架
货架
光盘刻录
光盘刻录
光盘制作
光盘制作
光盘印刷
光盘印刷

摆闸
痤疮
痤疮
色斑
色斑
黄褐斑
黄褐斑
青春痘
青春痘
口腔医生
口腔医生
口腔
口腔
口腔医院
口腔医院
口腔科
口腔科
三星集团电话机
呼叫中心
电话交换机
交换机
呼叫中心
测厚仪
测温仪
停车场
道闸

22 asdd July 17, 2007 at 1:35 am

wulvyou 07年7月17日
google排名
google排名
wow gold
wow gold
powerleveling
powerleveling
wow powerleveling
wow powerleveling
wow power leveling
wow power leveling
world of warcraft powerleveling
world of warcraft powerleveling
wow power leveling
wow power leveling
cheap wow powerleveling
cheap wow powerleveling
hongkong hotel
hongkong hotel
beijing tour
beijing tour
翻译公司
翻译公司
上海翻译公司
上海翻译公司
北京翻译公司
北京翻译公司
门禁

集团电话
集团电话
货架
货架
货架
google排名
条码打印机
机票
搬家公司
北京搬家公司
仓库
仓库
仓库出租
仓库出租
物流园区
物流园区
条码打印机
猎头
猎头
虚拟主机
红外测温仪
红外测温仪
超声波测厚仪
超声波测厚仪
超声波探伤仪
超声波探伤仪

频闪仪
频闪仪
涂层测厚仪
涂层测厚仪
电火花检测仪
电火花检测仪
beijing
beijing
china tour
china tour
great wall
beijing travel
beijing travel
搬家
搬家公司
搬家公司
北京搬家公司
北京搬家公司
beijing
beijing
china tour
china tour
great wall
beijing travel
beijing travel

摆闸
痤疮
痤疮
色斑
色斑
黄褐斑
黄褐斑
青春痘
青春痘
三星集团电话机
呼叫中心
电话交换机
交换机
呼叫中心
停车场
道闸

23 hyangel July 17, 2007 at 2:46 am

houyuping 07年7月17日

google排名
google排名
wow gold
wow gold
powerleveling
powerleveling
wow gold
wow gold
world of warcraft gold
world of warcraft gold
powerleveling
powerleveling
power leveling
power leveling
wow power leveling
wow power leveling
wow powerleveling
wow powerleveling
world of warcraft powerleveling
world of warcraft powerleveling
world of warcraft power leveling
world of warcraft power leveling
cheap wow powerleveling
cheap wow powerleveling
cheap wow power leveling
cheap wow power leveling

wow powerleveling
wow powerleveling
wow power leveling
wow power leveling
power leveling
power leveling
wow power level
wow power level
Ddo plat
Ddo plat
FFXI Gil
FFXI Gil
GW Gold
GW Gold
GW Power Leveling
GW Power Leveling
RS Gold
RS Gold
RS Power Leveling
RS Power Leveling
Lotro Gold
Lotro Gold
Lotro Power leveling
Lotro Power leveling
翻译公司
翻译公司
上海翻译公司
上海翻译公司
北京翻译公司
北京翻译公司
监控

货架
货架
货架
涂层测厚仪
涂层测厚仪
翻译公司
仓库
仓库
仓库出租
仓库出租
物流园区
物流园区
超声波探伤仪
超声波探伤仪
google排名
门禁
门禁
门禁系统
门禁系统
搬家
搬家公司
北京搬家公司
光盘制作

光盘印刷
光盘印刷
搬家公司
激光打标机
搬家公司
北京搬家公司
hongkong hotel
hongkong hotel
beijing tour
beijing tour
集团电话
集团电话
wow power leveling
wow power leveling
wow powerleveling
wow powerleveling
wow power level
wow power level
china tour
china tour
青春痘
青春痘
摆闸
痤疮
痤疮
色斑
色斑
黄褐斑
黄褐斑
青春痘
青春痘
三星集团电话机
呼叫中心
电话交换机
交换机
呼叫中心
测厚仪
测温仪
停车场
道闸

24 sent July 17, 2007 at 4:40 am

南昌运输公司
成都运输公司
合肥运输公司
福州运输公司
江苏运输公司
江苏运输公司
货运公司
货运
福州运输公司
合肥运输公司
南昌运输公司
太原运输公司
天津运输公司
大连运输公司
乌鲁木齐物流|
南京物流
南京搬家公司
货运公司
运输
运输公司
运输
危险品运输
货物运输
货物运输
运输公司
南京陆路运输
重型货架
中型货架
货架
货架公司
货架
工位器具
工具车
工具柜
垃圾车
登高车
物流台车
折叠式货箱
钢料箱
货箱
货架
折叠式仓储笼
仓储笼
柱式托盘
栈板
钢托盘
托盘
物料整理架
流利条货架
悬臂货架
阁楼式货架
货架
移动式货架
模具货架
贯通货架
搬运车
高空拣选车
全电动托盘搬运车
半电动托盘搬运车
电动托盘搬运车
油桶搬运车
圆桶搬运车
堆垛车
液压手动堆垛机
电动液压托盘搬运车
电动搬运车
手推车
搬运车
手动液压托盘搬运车
手推车
南京手推车
静音手推车
手推车
贯通货架
移动式货架
阁楼货架
悬臂货架
模具货架
抽屉货架
重型货架
次重型货架
轻型货架
圆桶搬运车
液压手推平台车
液压手动堆垛机
手推车
手动托盘搬运车
整理柜
工具车
工具柜
物流台车
波纹板式料箱
料箱
仓储笼
塑料托盘
钢托盘
托盘
物料整理架
工作台
轻型货架
中型货架
重型货架
仓储笼
钢托盘
塑料托盘
货架公司
南京货架
货架公司
货架厂
仓储货架
上海货架
轻型货架
中型货架
重型货架
阁楼货架
悬臂货架
贯通货架
仓储笼
钢托盘
塑料托盘
登高车
手推车
工具柜
手动液压托盘搬运车
货架厂
货架
货架公司
货架厂
南京货架
上海货架
轻型货架
中型货架
重型货架
阁楼货架
悬臂货架
贯通货架
托盘
钢托盘
仓储笼
塑料托盘
登高车
苏州货架
无锡货架
杭州货架
仓储笼
钢托盘
轻型货架
中型货架
重型货架
货架公司
货架厂
上海货架
南京货架
苏州货架
杭州货架
无锡货架
宁波货架
嘉兴货架
台州货架
南京货架
货架厂
货架公司
仓储货架
轻型货架
中型货架
重型货架
阁楼货架
悬臂货架
贯通货架
汽车配件货架
托盘
钢托盘
塑料托盘
仓储笼
料箱
苏州货架
无锡货架
常州货架
浙江货架
杭州货架
衢州货架
湖州货架
金华货架
绍兴货架
宁波货架
温州货架
台州货架
嘉兴货架
南通货架
仓库货架
沈阳货架
角钢货架
天津货架
库房货架
大连货架
仓储货架厂
山东货架
济南货架
厦门货架
青岛货架
货架设计
货架图片
重庆货架
货架制作
仓储货架公司
南京仓储笼
上海仓储笼
苏州仓储笼
无锡仓储笼
常州仓储笼
杭州仓储笼
宁波仓储笼
温州仓储笼
台州仓储笼
嘉兴仓储笼
浙江仓储笼
南京货架
南京货架
货架厂
货架厂
货架厂
仓储笼
货架公司
货架公司
货架公司
仓储货架
仓储货架
仓储货架
轻型货架
轻型货架
轻型货架
中型货架
中型货架
中型货架
重型货架
重型货架
阁楼货架
兰溪货架
塑料托盘
舟山货架
塑料托盘
永康货架
塑料托盘
塑料托盘
塑料托盘
临海货架
塑料托盘
湖州货架
宁波货架
温州货架
江苏货架
塑料托盘
塑料托盘
靖江货架
塑料托盘
滨海货架
泰兴货架
湖州货架
绍兴市货架
宁波货架
温州货架
江苏货架
江苏货架制造
靖江货架
金湖货架
滨海货架
太仓货架
吴江货架
泰兴货架制造
常熟货架
淮安货架
江阴货架
宜兴货架
张家港货架
昆山货架
南通货架
扬州货架
盐城货架
淮阴货架
连云港货架
镇江货架
常州货架
徐州货架
无锡货架
苏州货架
苏州货架
南京货架
货架
货架公司
货架厂
重型货架
阁楼货架
阁楼货架
悬臂货架
悬臂货架
悬臂货架
贯通货架
贯通货架
贯通货架
托盘
托盘
托盘
钢托盘
钢托盘
仓储笼
仓储笼
仓储笼
钢托盘
塑料托盘
塑料托盘
塑料托盘
手推车
手推车
手推车
北京货运
货运公司
货运代理
上海货运
国际陆路运输
陆路运输合同
陆路运输ppt
上海陆路运输
中国物流公司
成都物流公司
南京物流公司
宁波物流公司
杭州物流公司
广州物流公司
深圳物流公司
北京物流公司
上海物流公司
西安至南京货运公司
广州货运公司
货运
南京货运市场
南京货运代理有限公司
南京货运信息
南京货运出租
南京货运配载
南京货运网
南京货运价格
南京货运代理
南京货运代理公司
南京货运公司
货运公司
南京运输公司
南京货运
南京货运配载
西安货运配载
湖南货运配载
南京市货运配载
共商货运配载
货架
折叠式料箱|折叠式料箱制造
整理架|整理架制造
静音手推车|手推车系列
工业货架|工业货架厂
仓库货架|仓库货架厂
部队货架|部队货架厂
济南货架|济南货架厂
巢湖货架|巢湖货架厂
芜湖货架|芜湖货架厂
大连货架|大连货架厂
货架公司
郑州货架|郑州货架厂
天津货架|天津货架厂
重庆货架|重庆货架厂
成都货架|成都货架厂
四川货架|四川货架厂
云南货架|云南货架厂
湖北货架|湖北货架厂
湖南货架|湖南货架厂
新疆货架|新疆货架厂
昆明货架|昆明货架厂
南京货架
合肥货架|合肥货架厂
安徽货架|安徽货架厂
江西货架|江西货架厂
惠州货架|惠州货架厂
江门货架|江门货架厂
东莞货架|东莞货架厂
佛山货架|佛山货架厂
中山货架|中山货架厂
深圳货架|深圳货架厂
广东货架|广东货架厂
货架厂
广州货架|广州货架厂
江苏货架|江苏货架厂
辽宁货架|辽宁货架厂
沈阳货架|沈阳货架厂
山东货架|山东货架厂
张家港货架|张家港货架

25 木风淋语 August 18, 2007 at 2:35 am

Comments on this entry are closed.

Previous post:

Next post: