Procrustean Art of Backtracking: “Price as Independent Variable”
Opening any textbook on Principles of Economics, we see the diagram of market with the price ( p ) on the abscissa and the quantity traded ( q ) on the ordinate. Further: 1) The demand representing the marginal utility in the currency unit slopes downward. 2) The supply representing the marginal production cost in the dollar slopes upward. 3) There surely is a cross near the right end of the diagram. 4) There we go, the equilibrium price ( p* ) and quantity ( q* ). Easier than eating the cake (and having it too)! Don’t get it wrong. The framework simply is a metaphor; the metaphor by definition is not reality. In addition, the equilibrium price and the quantity traded can be known ex post . The market never really works as per...