All the posts in this thread assume that there exists a separable (or roughly separable) domain of human activity in which prices exist, and that those prices (that pricing behavior) can be explained within that realm. In other words, it assumes that the subject line, with its division into "economists" and "non-economists," is intelligible. That an abstraction called "the economy" is a defensible abstraction, and that questions such an assumption raises can be answered within that realm of activity. But if prices cannot be explained -- or if the attempt to do so results in endless confusion of clashing explanations -- then _one_ possible explanation is that no such realm exists, that "economics" is a pseudo-discipline with a pseudo-object of study. The original analysis of human activity which led to the abstraction called "economics" was improper (that it violated the Socratic point that the dialectician must divide the roast at the joint, not splinter its bones).
Carrol -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of Jim Devine Sent: Monday, March 07, 2011 7:56 AM To: Progressive Economics Subject: Re: [Pen-l] Explain to a non-economist what Marginal Cost is did you say you were talking about perfect competition? I'm sorry that I missed that. perfect comp. is an extremely silly idea. Marginal cost is less silly. It depends on what the alternative concept is, i.e., what replaces MC. This is an important point: it's not enough to criticize a concept (e.g., MC). Without an alternative to replace it (and one subject to less criticism), we end up with nothing but "I don't know." There are very good substitutes for perfect comp., such as monopolistic comp. What's the replacement for MC? (As I noted in an earlier post, Kalecki pointed out that with unused capacity (as we normally see), the MC curve is horizontal as output rises, because there are no diminishing marginal returns to a fixed input. This _applies_ the concept of MC in a realistic context rather than rejecting it.) Also, the value of MC and whether we're willing to accept its limitations depends on what we're trying to get by using it. On Mon, Mar 7, 2011 at 4:22 AM, Sabri Oncu <[email protected]> wrote: > Jim: > >> Sabri Oncu <sabri.oncu at gmail.com> wrote: >>> Marginal cost pricing assumes that price is >>> independent of quantity, so profit is >> >at when price is equal to the marginal cost. >> >>no, it's where marginal revenue equals marginal cost. > > > Comm'on Jim, > > In marginal cost pricing marginal revenue is equal to price because > revenue is equal to price times quantity and price is independent of > quantity. This is what the neoclassicals mean by perfect competition, > right? All firms are price takers in such markets so price must be > independent of quantity. > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
