Proving Supply and Demand is Wrong in 60 Seconds #shorts
Channel: Skeleman
Date: 2022-07-10

Supply and demand theory is fake and here’s a 60 second debunk.

The theory says there is a relationship between the price of a commodity and the quantity of a commodity.

1. The simplest relationship is linear. A y-intercept and a slope. Without the slope the line is flat, no relationship. We’ll get back to why we need an intercept.

2. The theory uses two relationships—supply and demand. So we have 2 equations thus 6 unknown values. Price, quantity, the two slopes, and the two intercepts.

3. In real world observations we can only observe price and quantity. That brings our unknowns down to 4. 

4. 2 equations with 4 unknowns is unsolvable. Or, in scientific terms, not falsifiable. Supply and Demand theory is not scientific.

A second price-quantity pair is no help either. The supply and demand equations would be different since two lines only have one intersection.

A “shift” in the curves is a change in the y intercept. This is also why we need intercepts; without them, all the intersections would happen at 0,0. Unless we want to model markets where nothing happens, we can’t use supply and demand. They aren’t science.

This is why not a single economic study has a real supply or demand curve modeled. It’s impossible.

The answer is to model price and quantity using some third thing. Labor ends up beating out every other predictor.

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