In the hard sciences such as physics, math, chemistry, et al, the use of indepen

Question

In the hard sciences such as physics, math, chemistry, et al, the use of independent and dependent variables is different from their use in economics. In the hard sciences the independent variable is shown on the horizontal or X axis and the dependent variable on the Y or vertical axis. In economics we reverse them. We put the independent on the Y axis and the dependent on the X axis. This allows us to display the demand schedule, the supply schedule and equilibrium on the same graph.

Before we go any further in this discussion let me define the two. The independent variable is the first mover. It's the thing that moves first. The dependent variable is defined as the variable that changes in value only because the value of another variable changed. For example, when the price of a product goes up or down the demand for that product will change. Price goes up, demand tends to go down. Price goes down demand tends to go up. The only reason the demand moved was because the price moved. Price was therefore the first mover, the independent variable, and quantity demanded followed suit and changed, the dependent variable.

I mention this because it is very important for businesses to know what will happen to revenues when their prices change.

It is assumed that price moves first---the first mover---but do you believe demand could also be considered the first mover? In other words, does price change first or does demand?

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Explanation / Answer

Answer : As in general, law of demand states that when price get flucated demand go up and down. It shows that when price increase demand decrease but the level of decrease depend upon its elasticity.

But there are some exceptions where demand is the first mover here

CRUX : So in general terms it depend upon situation where demand is first mover or price is first mover in an economy.

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