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We have price on the vertical axis because that's how Alfred Marshall (1890) drew his graphs in Principles of Economics. For better or worse, Principles was hugely influential. And so the present-day convention is Marshall's convention. As Humphrey (1992) writes: The Marshallian cross diagram bears Marshall's name because he gave it its most complete, ...


7

It isn't just something in undergraduate study, it's something common across economics in general. Consumers and producers can set quantity, not price. For example, when you enter a store, you can only choose the amount of stuff you buy, not the price at which you buy it. This logic is a little more confusing for the producer's side of things. One of the ...


6

To your three points When drawing supply and demand, price (which one might more naturally think of as being the independent variable) is on the vertical axis and quantity on the horizontal axis. 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 ...


5

Good accountants are aware of the difference between nominal and effective annual rates, but it is certainly likely that in practice they were often confused. The formula $\left(1+\frac r n\right)^{nt}$ is incorrect if $r$ is understood as the effective rate, the correct formula is $\left(1+\frac{i^{(n)}} n\right)^{nt}$, where $i^{(n)}$ is the (annualized) ...


4

This question cropped up on Economics.SE, where I posted this answer: This objection never made too much sense to me. In the standard model of perfect competition, firms take the price as given and respond by choosing their quantity. So you have a model in which a bunch of actors choose quantity and the market price emerges as a consequence of all of those ...


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