[southbridge]

> I asked him what he was assuming for his supply and demand curves -- continuous, uniformly continuous, differentiable, continuously differentiable, infinitely differentiable, convex, pseudo-convex, quasi-convex, etc.? He said nothing. > Soon I got a call from my department secretary to call my Ph.D. advisor -- I was out of the econ course!

This is my favorite economist joke: There is a physicist, chemist, and an economist stuck on a desert island together. They find a can of beans, and are discussing how to open the can. The physicist says "Lets climb up the tree and drop a rock on it. The force from the drop will make the can explode and open." Then the chemist says "We should put the can in some saltwater. The metal will corrode, and we can get inside." Finally the economist says, "Let's assume a can opener..."

[graycat]

Yup, on wild assumptions, considering utility functions, the average busy housewife and mother of four children, all under 6, goes to a big grocery store, gets a list of all the items for sale and their prices, notes her utility function as a function of the whole inventory, notes her grocery budget, and solves the likely NP-complete, non-linear, discrete (integer) optimization problem, maybe under uncertainty if she is buying extra bananas on sale and risking that they go bad too soon or buying too little fresh chicken hoping that they may be on sale in two days, etc., all in her head, right away!

Yup, and if buy a lot more transistors, then the price for each will go up? Hmm. Transistors used to be several dollars each, and now can get a billion or so for less than $100.

If buy more disk space, then the price per byte will go up? Gee, it used to be that got 300 MB for $40,000 and now can get 2 TB for about $50.

If buy more in computing, then the price per unit of computing will go up? Hmm, used to be could get a nice DEC dumb terminal for $1400, and now can get one heck of a desktop computer for that.

So, sometimes, if buy a lot more of something and wait a while, then the price per unit can go down, not up. If don't want to wait, then buy in quantity and get a volume discount. Or, instead of buying the teeny, tiny, itty bitty bottles of sweet pickle relish, buy the gallon size at much less cost per ounce. If are buying in really big quantities, say, Hertz buying a fleet of cars, then Ford can put on an extra shift and get the price way down just for Hertz.

Net, that one day in econ class looking at free hand apparently differentiable convex supply curves was a bummer.