as a physicist, i have often been amazed at the diagrams in beginning
economics texts that show curves that intersect to define a price based
on supply and demand. what always strikes me is that the data points
("dots") lie right along the lines themselves, which i take to mean
that real data is never used to show a supply-demand curve. and i have
often wondered if such functional relations [S($), D($)] really exist.
**
on amazon i have been reading some reviews of books that michael p has
recommend to me. one review -- on the text "The Stock Market and Finance
>From a Physicist's Viewpoint" -- says:
Lognormality is the last part of Osborne's book. The first chapters
are even more interesting. There, Osborne tears the `mathemology' of
Samuelson's Economics text to shreds by pointing out that the famous
supply-demand curve can't be constructed from any sort of data. The
main point is that price does not exist as a function of either
supply or demand. Example: suppose that 25 tomatoes are available
(supply). What's the price? Answer: anything or nothing
(nonuniqueness). Even better, Osborne shows that one can obtain data
on both supply and demand as a function of price, so that discrete
(noncontinuous) supply and demand curves can be plotted for a given
commodity in a given market. What a pity that Osborne did not set
his mind to discussing `utility', because (as Mirowski points out in
"More heat than light) the differential form that defines utility is
generally nonintegrable, meaning that utility does not exist.
Samuelson wrote papers trying to get around this in the 50's, but
the correct underpinning of General Equilibrium Theory was never
established. Osborne rightfully points out that people who believe
in the approximation of continous price changes and efficient
markets are grist for the mill of traders who use just the opposite
assumptions to make money off them every day.
are there any problems with what the reviewer says above?
Les
