Re: [Pen-l] deflation??

["Jim Devine" <jdevine03@xxxxxxxxx>]

me:
>> [Note that most of the prices that are falling are "commodity" prices
>> that are inelastically supplied and demanded (like those of gasoline,
>> fruits, veggies, etc.)

Carrol:
> I don't understand this. Is their a typo? It seems to say that both the
> supply and the demand for (e.g., fruit) are ineleastic. Or does my poor
> eyesight get in my way?

I'm saying that as prices of veggies (e.g.) fall, the quantity of
veggies supplied does not fall in proportion. That, in a nutshell, is
inelastic supply. (the percentage fall in prices > the percentage fall
in quantity supplied.)

Also, as the price falls, the quantity of veggies demanded does not
rise in proportion. That's inelastic demand. (the percentage fall in
prices > the percentage rise in quantity demanded.)

In this case, a fall in price (due to either a demand shift or a
supply shift) causes a fall in the total sales revenues earned by
veggie-sellers. If they have any debts, this likely means big trouble.
This trouble (bankruptcy, etc.) has hit farmers again and again,
helping to explain the concentration and centralization of that
industry.
-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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