TITLE:
A Model Illustrating Consumer Inconstancy: Demand and Supply Sides
AUTHORS:
Gerald Aranoff
KEYWORDS:
Competitive Manufacturing; Output Flexibility; Demand Fluctuations; Marginal Cost Pricing; Cost Curves
JOURNAL NAME:
Modern Economy,
Vol.4 No.12,
December
13,
2013
ABSTRACT:
John M. Clark in his classic 1923 Economics of
Overhead Costs asks if anyone knows what it costs to supply demand
irregularity. He also asks if consumers need demand
irregularity, consciously or unconsciously. We provide a model for a plausible
theoretical basis to begin to answer each question. The models permit
mathematical proofs and graphic demonstrations of the costs to society of
supplying for demand irregularity and of the willingness to pay on the part of
consumers for demand irregularity. JEL (D24).