Here you go, Matt. Roy had nothing but moralizing screed denouncements as his response. Here's your chance at bat. Show me and my quoted/cited sources the error of our ways. And by all means, be specific, and cite your sources as well.
Any other NATURAL resource, which is fixed in supply and therefore has a vertical supply curve.
Roy, you don't know what price is as it relates to supply, because you confuse two different uses of the word (the ASK price vs. actual market price).
You also don't understand supply, or "available to the market" is it relates to a seller's
willingness to make a given quantity available to the market at a given price. You argue that "price" is only established after a trade has been made, and I tried to go along with that in order to make a point, but it's actually wrong. That's the market price only, which does NOT control the ASK price, which is
the only thing used to to determine supply on a supply curve.
Here's a chart, a simplified version of a more general figure representing a comprehensive ABM market model described elsewhere (
Filatova, Parker et al. 2007;
Filatova , van der Veen et al. 2007;
Parker and Filatova 2008)) that illustrates this, including the supply/price relationship in economics:
Note how the actual market price of land is differentiated from the Ask price in the Ask formation. The "actual land price" or "market price" is to the right of SUPPLY SIDE. This is determined by actual transactions (i.e., when Bid=Ask ---> MARKET TRANSACTION). This market price (established, and always in the past) is no longer part of the supply, but only serves as informational feedback that helps both sellers and buyers in their future "Ask price formation" and "Bid price formation", respectively. But in a free market neither are bound by it, which is why market price (past) does not control supply or demand (present) which, when consummated as future transactions, determine future market price.
The
DEMAND SIDE and
SUPPLY SIDE (Bid/Ask formation) occur BEFORE market price is established, and as separate entities, which come together during the
PRICE NEGOTIATION PROCESS. Because the market price is determined by supply and demand, and not the other way around, there is lineage that leads back to an original transaction - for which a market price had yet to be established. Thus, no chicken/egg paradox exists for supply, because the FIRST SUPPLY of a thing does not require a market price. Only an Ask price.
The market price (as historical information) is often used by buyers and sellers in their respective Bid/Ask formation, but as decision making feedbacks only. It DOES NOT determine or control them, and is NOT, therefore, a controlling factor on supply or demand. Only buyers control the demand side (willingness to buy a specific quantity at a specific bid price), just as only sellers control the supply side (willingness to sell a specific quantity at a specific ask price).
Again, from that same source: (which shows the word "prices" in "ask" and "bid" context)
Supply is neither defined as nor controlled by what HAS BEEN made available for purchase in the past. It is constrained to the quantity that is NOW made available by sellers for FUTURE purchase at a given minimum
ask price.
Ask Price determines supply, not Market Price.
Thus, if a seller has 10 acres of land divided into ten 1 acre parcels, that seller can decide which of these parcels he is willing to make available to the market at a given price. The seller may even FIX that supply as a function of quantity (area) made available for a given price over a specified time (the seller's supply schedule). That's the supply of that land made available to the market, which has nothing to do with market price, the total quantity, or even whether any of it actually trades.
A little more reading for you, to help you understand: (emphasis mine)
Virgil L. Hurlburt said:
The quantity of land, in terms of geographic area, are fixed. But that does not necessarily mean that the number of tracts or acres to be offered for sale on the market will not vary with price of land or that changes in relative product prices will not encourage changes in products.
In the market-schedule sense the definition of supply of land follows that of other economic goods; the supply schedule refers to the relation between prices and the quantities (area) that owners are willing to sell. The supply price is the seller's minimum asking price.
I can see why it's important for you to remove the seller's decision making power and its role in supply as it relates to land, and why you would attempt to change well-established economics theory to make "market price" rather than "ask price" the determinant for supply. After all, if "supply" indeed equals the total quantity in existence, you can then claim that the supply itself fixed. But that is not reality, not the truth, and certainly not established economic theory as it relates to supply and demand.
You want to think of supply in terms of production only, such that anything rare, already in existence and non-reproducible as a factor of production as somehow ALL "available to the market" and therefore "fixed supply", on the basis that it exists in the aggregate in fixed quantity, which can then be placed somewhere on a supply curve. You erred in trying to a) make supply a function of the market price, not ask price, and b) assume that the seller's willingness to sell is only a matter of price, and c) ignore the fact that only a seller is in a position to create a supply curve in the first place! I tried accommodate your misapprehension in all of this by ignoring a and c, and saying that this could be true so long as you make the ask price range somewhere from ZERO to INFINITY. Then it could technically include all possibilities.
Infinity could be used to technically account for anything that that a seller is NOT willing to make available at any price (NO ASK EXISTS, NO BID WOULD BE ACCEPTED). You could plot that as INFINITY on the supply curve, because whatever a seller is NOT WILLING TO MAKE AVAILABLE AT ANY PRICE is, by definition, "priceless", and not available to the market, and therefore not normally counted as "supply". By referring to it as infinity, it's only a question of time, theoretically, before the possibility of that number coming down to some lower point on the supply curve. But that doesn't mean it's "available to the market", or that this could become the actual market price for that particular quantity, because it is impossible for anyone on the demand side to Bid infinity. But at least you could sneak it onto the supply curve.
How much land trades at its price? Is that amount altered by how much the price is?
You're talking "market price", and therefore history - not actual supply, as defined as the quantity now made available at a given ask price, for which a future market price has yet to be established.
Show me one who thinks the supply of original works by dead artists is not fixed.
Pretty much most economists, including those cited in this post, given that they understand the difference between a quantity in existence and actual supply as it relates to a willingness to sell a portion of that quantity in existence at a given price at a given time.
