Say - exceeding demand, then assuming that the good he...

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Say’s Law: The classical theory of employment rules out the possibility of any general and prolonged unemployment. The classical employment analysis is based on the Market Law of the French economist J. B. Say. The law is simply a description of market exchange activity: "Supply creates its own demand." This apparently simple statement has serious implications. Usually, for an individual good of a smaller seller this statement appears to be a truism. Such a businessman would make suitable adjustments in the price he charges and would clear the market for the supply that he intends to make. If on a particular day he observes that his supply is
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Unformatted text preview: exceeding demand, then assuming that the good he supplies is extremely perishable (the supply of which cannot be withdrawn or postponed), he will lower the price somewhat and thus create sufficient demand for it. So far so good. However, it is important to remember the classical economists and Say’s Law were concerned not with a single good and a single supplier of it. The law is a generalization at the macro-level where all varieties of goods and services are supplied. This law in particular meets with serious limitations when an attempt is made to make it applicable to the labor market and to the conditions of employment level....
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This note was uploaded on 11/17/2011 for the course EC ec 201 taught by Professor - during the Fall '10 term at Montgomery.

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