The stock market fell when the fed cut rates

> That’s an amusing thing for the person with less education to send

https://en.m.wikipedia.org/wiki/Dunning–Kruger_effect

@Sophie this is pretty much peak dunning Kruger effect. You’re assessing your economics as if you have a large depth of understanding, however when talked about: price controls, supply and demand, “capitalism”, “Keynesian economics”, new deal and corporate taxation for examples - there is no understanding.

...

You misapplied the theory

This is absolutely peak dunning Kruger

You’ve taken some economics

So you think the theories you understand apply universally as you understand them

But if you go back to our price control discussion, you can see clearly

You keep wanting to take it back to the theory, but are unable to synthesize outcomes for the specific situation

We can go ahead and revisit it if you’d like- what keeps the firm in question from producing the full level of need?

A price max applied below the equilibrium results in lower supply but higher demand. That’s a shortage. The firm is producing less to compensate the reduction in profits.

This is econ 101

This is why you see price controls causing shortages and surplus waste.

A good example is the paper I linked on drug shortages in Europe countries.

Again, you’re failing to consider the actual situation

And making bad assumptions about the shape of the curve

The shape is irrelevant, the point on the curve where PMAX is - is below the equilibrium

That causes shortages - it doesn’t matter if it’s a vaccine or a laser gun

That’s not correct

If a consumer is permanently removed from demand after ANY consumption, it changes your assumptions about the curve

You’re imagining a scenario in which there is indefinite demand in the long term

But if someone receives a vaccine tomorrow, they’re no longer generating demand, forever

You can’t compare it to other drugs, you can’t compare it to food, you can’t compare it to laser guns

You have to live in reality sometimes

Normally you’d talk about this as extremely inelastic demand

BUT

Because someone is REMOVED FROM THE DEMAND CURVE when they consume

The demand curve jumps to the left every time there’s consumption

So what actually happens is that without price controls, you’re only fulfilling part of the NEED even if you’re fulfilling equilibrium demand

But with price controls, you fulfill 100% of need

I don’t know how to say this without sounding condescending, so I’ll just say it

Sincerely; if you don’t understand, please go ask an economics professor

You’re still in school right? Just go ask one about the demand curve of vaccines

Of truly single use consumption goods

With low variable cost

Particularly when they have high front-loaded fixed costs

You can think of it as the inverse of a monopolistic pricing model actually- production will go till supply equals demand, non marginal

But that’s just a quirk

It doesn’t matter if it’s a “one time good”. It’s consumed over years, not at once. So demand curve is not effectively shifting but it is on equilibrium. This means a price cap will still cause shortages.

The equilibrium price is where shortages doesn’t occur, that means need is filled