[js8]

The problem is Physics 101 is a good approximation to reality, and you know where. The free markets are not a good approximation of normal markets, because the strategies of the actors are completely different.

The problem is with game theory - the limit of optimal strategies for some games is not always the same as the optimal strategy for the limit game. This breaks the ability to approximate.

So, for example, you cannot make conclusion from a game with infinite number of actors ("free market") to a game with finite number of actors.

[JumpCrisscross]

> The free markets are not a good approximation of normal markets, because the strategies of the actors are completely different

You can use freshman economics to predict the average oil price in a given year, from tables of quantities supplied and demanded. Where one finds deviation, e.g. when OPEC was founded, meaningful new information arrived.

Most markets don't follow freshman economics which is why there is lots of interest in developing better models. But we don't start physics with CFD.

[js8]

> You can use freshman economics to predict the average oil price in a given year, from tables of quantities supplied and demanded.

Not sure if I completely understand what you want to do, but if I do, this is not drawing supply/demand curves, this is just predicting the prices based on history of supply and demand. The supply/demand curves (that is, the model) is what I am criticizing.

[icebraining]

You can't predict based on history without having a model that tells you how to extrapolate that history.

[js8]

You could have a statistical model. You record supply, demand and price over time period and then you can predict price by matching it to supply and demand. No knowledge of supply/demand curves is needed.

But I am not clear if this is what parent wants to do.

[JumpCrisscross]

> You record supply, demand and price over time period and then you can predict price by matching it to supply and demand

That's what the damn curves are! Even calling them curves is misleading. Freshman economics looks at linear systems. You take data, draw a regression and then predict a price.

Supply and demand isn't voodoo. Early economics courses are inaccurate because they start with linear models a general population of freshmen without strong mathematics training can grasp.

[js8]

> That's what the damn curves are!

No, they are not. The curves are drawn at a given point in time, what you're doing here is recording supply/demand over time. You would have to assume in addition that the curves didn't change over the time period so you could say this data are the demand/supply curves.