Your correspondent is correct. Economics 101 did explain that prices are set where demand and supply curves intersect.
Many years ago, in my first economics 101 class, the tutor listed six assumptions about the market on the board. They looked debatable to me, but when I asked when we would discuss them, I was told that they were not up for discussion, they were given. They were fundamental to the whole course.Gill Riley, Doncaster EastWe have a number of contributors to the letters pages talking about economics 101 and demand and supply curves, but they fail to mention that this mantra assumes a perfect market.
Economics 101 is based on a perfect market, where there is competition between suppliers of a commodity, not the current market we have in regard to gas. Sure we have multiple retailers, but not producers, so there is no perfect market. Ross Gittins has been pointing this out for years. Australia has sufficient gas for domestic supply but the producers are controlling the price and supply to us.
All Australian resources should be recognised as being owned by us – i.e. the people of Australia. Therefore, we should do now what we should have done 100 years ago and bring into law a provision that every commercial use of our collective resources should automatically have a minimum percentage allotted to the government – say 15 per cent or 20 per cent – which the government could put into a common fund, or some such.
Hmm. Energy costs going up. Reliability going down. Let’s close more coal plants and build more solar and wind farms! Clearly if we speed this up the correlating cost increases and reliability decreases will magically reverse! And no point building more dams.