Common questions about Supply and demand

Short answers, pulled from the story.

Who first used the phrase supply and demand in 1767?

James Denham-Steuart first used the phrase supply and demand in 1767. He was a Scottish writer who introduced the terminology to explain price determination before graphical representations existed.

When did Fleeming Jenkin draw the first supply and demand curves?

Fleeming Jenkin drew the first actual curves in 1870. The engineer and political economist introduced the diagrammatic method to English literature to visualize the relationship between price and quantity.

What is the oldest known reference to supply and demand principles?

The oldest known reference appears in the 256th couplet of the Tirukkural, an ancient Tamil text composed at least 2000 years ago. The text states that if the world did not desire meat, there would be no one to offer it for sale.

What are Giffen goods and how do they differ from standard demand?

Giffen goods are inferior goods that absorb a large portion of a consumer's income and cause quantity demanded to increase as price rises. The classic example involves potatoes in 19th-century Ireland where peasants bought more potatoes when prices rose because they could no longer afford meat.

How does a technological breakthrough affect the supply curve?

A technological breakthrough shifts the supply curve outward and causes the equilibrium price to fall while the quantity rises. This movement allows consumers to buy more at a lower price as the market adjusts to the new method of production.

Who criticized the partial equilibrium model in the 20th century?

Piero Sraffa, a prominent 20th-century economist, critiqued the inconsistency of partial equilibrium analysis. He suggested that the Marshallian partial equilibrium box was nearly empty of logical substance.