That's commonly believed by mainstream economists, as an article of faith. That there is a demand curve, and it always goes down. It's not always true, unless a huge number of axioms hold (none of which are true).
It's most obviously not true for prestige goods, which go up in demand as price rises (and then go down as no-one is able to afford them). Demand curves can be wacky, even discontinuous ... and don't always go up.
But if they don't go up all the time, then 99% of analytic macroeconomics (as it's taught) isn't analytically correct, and the communists might win.
1. There is a demand curve, or at least we can plot demand. I would agree it can be wacky.
2. It is very likely that even if we get the exact demand curve wrong, it is probably a net win for him to raise his prices given that he is turning down work.
The universe of potential purchasers consists of a set of agents (i=1...N) and each agent has a reserve price R[i]. If a good is priced <= R[i], Agent[i] will purchase it. If it is priced > R[i], Agent[i] will not.
The problem is that demand is not as simple as "agents will buy goods below their reserve price." Real world experience shows us that there exist luxury and inferior goods.
We can quite simply see that there are (many) agents who could buy any number of walmart jeans, but would never set foot in the store. Another chunk of agents currently buy, say, Levi jeans, but likely wouldn't buy those either, if those exact jeans were a third the price and sold in a discount store.
Similarly there are agents who don't give Levi a second thought, but will line up for jeans of similarly quality, trivially variable style and 10x the price.
The real world demand curves for blue jeans don't look like the simple axiom suggests.
I didn't claim the law of demand was perfect or that substitute goods don't exist. I was merely pointing out that wisty was wrong to claim the law of demand requires that "a huge number of axioms hold (none of which are true)." You need only one axiom which is, generally speaking, reasonably accurate.
Further, your example of jeans is trivially explained by noting that "jeans" is a broad category of goods, not a good itself. I.e., there is one demand curve for Levi jeans, a separate demand curve for hipster jeans, and a third demand curve for genuine levi jeans (not jeans that appear at first glance to be Levi, but sold by a shady discount store).
Your critique of the demand curve for jeans applies much better to various demand aggregates in macroeconomics, not the law of demand for specific goods.
I'm not sure this is correct. I remember in one episode of Mixergy, Andrew Warner said something to the effect of "X was the most expensive, so I bought it thinking they'd be the best and they sucked! Don't buy x."
You're missing the fact that nobody is denying that economic principles are a bit noisy in reality, and nobody's denying that demand curves are shaped by marketing and that the price itself is part of this.
That's commonly believed by mainstream economists, as an article of faith. That there is a demand curve, and it always goes down. It's not always true, unless a huge number of axioms hold (none of which are true).
It's most obviously not true for prestige goods, which go up in demand as price rises (and then go down as no-one is able to afford them). Demand curves can be wacky, even discontinuous ... and don't always go up.
But if they don't go up all the time, then 99% of analytic macroeconomics (as it's taught) isn't analytically correct, and the communists might win.