Mental Model: Equilibrium
There are many ways in which you can visualize the concept of equilibrium, but one of the simplest comes from Boombustology where a ball sits on a simple curved shape. A situation in which equilibrium …
Supply and Demand
The Great Ideas of the Social Sciences
What are the most important ideas ever put forward in social science? I’m not asking what are the best ideas, so the truth of them is only obliquely relevant: a very important idea may be largely …
How Raising Prices Can Increase Sales
I have posed at two different business schools the following problem. I say, “You have studied supply and demand curves. You have learned that when you raise the price, ordinarily the volume you can …
How credit cards bribe the purchasing agent
“They competed on the basis of raising prices. What other industry do you know that gets away with that?” Charlie Munger talks about how you can bribe the purchaing agent. I have one more …
Mental Model: Supply and Demand
Supply and demand is a foundational economic mental model. Understanding it is instrumental in building a better picture of how the world works. *** The law of demand states that there is an inverse …