# Thread: properties of supply demand curves

1. ## properties of supply demand curves

Is there any significant about a supply/demand curve having 2 points of y values for every x value? are you limited in the kinds of operations you can do? thanks very much

2. ## Re: properties of supply demand curves

these curves don't seem really rigorous in their use of variables x,y-
what are the functions normally used to model these situations?
for Qd it seems that at higher prices the rate of change would be greater and the curve would level out near the bottom?
but linear techniques would be useful in some situations?
thanks very much

3. ## Re: properties of supply demand curves

im afraid i dont see how your second post relates to your first one.

Is there any significant about a supply/demand curve having 2 points of y values for every x value?
i assume that y=Quantity and x=Price. Labour supply curves often have two y values for every x value, and this is significant. It means that increasing (hourly) wages can lead to a drop in the amount of time a worker is prepared to work.

If i remember correctly it is caused by the interaction of income and substitution effects as price increases. Intuitively, if you offer somone £1 million per hour, then they will only work a very short amount of time and use the rest of the time to spend/enjoy the money.

are you limited in the kinds of operations you can do? thanks very much
what are you trying to ask?
curves can be added along the quantity axis. This is the only operation i have ever had to do with them, but others may be possible.

4. ## Re: properties of supply demand curves

like the market graph can be the summation of the graphs of individual buyers- eg linear functions for individual buyers can be added which results in another linear function with lesser slope
well I'm asking about the process of modeling economic situations- it seems that in reality the functions used to describe price and quantity or wages wouldn't be static or linear
say you have a price/quantity graph for a good, would the curve be concave up as the derivative is steeper for higher price?
when you have a more complex situation with more variables and want to calculate equilibrium do you use matrix techniques? and you would use partial derivatives to find rates of change?

5. ## Re: properties of supply demand curves

it seems that in reality the functions used to describe price and quantity or wages wouldn't be static
I agree. Although the in reality you cant draw any continuous demand graph because goods are not perfectly divisible (did you ever try to buy 1.03333333333333333467 big macs?). The question is how accurate you need your model to be and what features of the market you are interested in looking at.

I dont know what happens in practice. in theory you can define neat looking demand curves using utility theory but these generally require strong assumptions about the customer's exact preferences.

when you have a more complex situation with more variables and want to calculate equilibrium do you use matrix techniques?
You could, although ive never seen it. For something vaguely similar see this: Input-output model - Wikipedia, the free encyclopedia

and you would use partial derivatives to find rates of change?
Again, you could but i've not seen it done much. Unless you are looking for a turning point the rate of change of a demand or supply curve is not normally very interesting. The price indicated by a demand curve is by definition the average revenue of each unit sold (assuming all units sell at the same price). Companies tend to be more interested in the rate of change of total revenue rather than average revenue per unit.

PS
Good questions!