Economics why is price on the y axis

The above answer is not completely satisfactory. It merely pushes the question back one level: Why did Marshall put price on the vertical axis? Short answer : Marshall first introduced a demand curve in There, he thought of quantity as the independent variable, with prices adjusting to clear the market.

It was thus perfectly logical for him to have quantity on the horizontal axis. Marshall was not the first to draw demand or supply curves. According to Humphrey, we have:. Prior to his publication, Marshall may not have been aware of Rau or Mangoldt's work, who were less well-known.

Whitaker, But of these four, only Jevons had price on the vertical axis. Cournot, Dupuit, and Jenkin all had price on the horizontal axis. But Cournot had price on the horizontal axis! I can find in Marshall's writings no explicit explanation for why he chose to deviate from Cournot, who was his greatest influence at least in this matter.

Marshall's demand curve then tells us about the dependent variable, i. I thus conclude that Marshall thought of quantity as the independent variable, with prices adjusting to clear the market. It was thus perfectly sensible for him to put quantity on the horizontal axis and price on the vertical. This way of thinking seems slightly unnatural to me and many others. But perhaps this is only because we've been trained, since our first economics classes, to think of price as the independent variable.

Moreover, as some here have pointed out, it's not really all that absurd to think of quantity as the independent variable, as Marshall did. There's also another cynical explanation I once came across: Marshall simply wanted to differentiate himself from Cournot et al. So he deliberately switched the axes. In my opinion this can plausibly serve as part of the explanation.

After all, Marshall felt that he had done a lot of his own original work and was somewhat peeved that others, such as Jenkin, had anticipated his work see e. Marshall's reaction to Jenkin's article, quoted in Whitaker, For elastic demand you are sometimes able to dictate the demand by the price. Normally though, the demand dictates the price. For purely inelastic demand , the price is entirely set by demand. So price is the dependent variable. This is is basically a demand curve but its geared toward predicting rates rather than reporting rates at different investments.

Notify me of new comments via email. Notify me of new posts via email. Blog at WordPress. Home About. Price or Quantity on the X Axis? March 22, Share this: Twitter Facebook. Like this: Like Loading Tom permalink. Leave a Reply Cancel reply Enter your comment here Indeed, this seems to be how Alfred Marshall who originated the modern form of the Demand-Supply diagram thought about things.

Lipsey as quoted here :. The normal convention is to put the independent variable on the X axis and the dependent variable on the Y axis. This convention calls for price to be plotted on the horizontal axis and quantity on the vertical axis. The analysis of the competitive market that we use today stems from Leon Walras, in whose theory quantity was the dependent variable. Graphical analysis in economics, however, was popularized by Alfred Marshall, in whose theory price was the dependent variable.

Economists continue to use Walras' theory and Marshall's graphical representation and thus draw the diagram with the independent and dependent variables reversed - to the everlasting confusion of readers trained in other disciplines. In virtually every other graph in economics the axes are labelled conventionally, with the dependent variable on the vertical axis. See also this post on Greg Mankiw's blog. The market is what quickly reacts to q supply. If there is an interruption to supply price will quickly go up.

The clearing price is a function of q. If the price is low and stays low some produces will exit the market but again not an immediate effect. Sign up to join this community.

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