Would anyone please explain why in Murray’s “The M**ystery of Banking” the supply curves are vertical, and not an angle? I am not sure I have seen them presented that way, but it makes perfect sense, much more than what you read in a mainstream book.
I presume you’re talking about money supply curves, in which case they’re also vertical in most mainstream books. At least in the context of a central bank (or, I suppose 100% reserve requirements) M is vertical because it’s determined exogenously.
No. The vertical supply curves in the second chapter: “What Determines Prices: Supply and Demand.” Using coffee as the example, the supply curve is vertical and perpendicular to the X axis. All of the examples have this vertical supply curve.
Ah, OK. Rothbard uses a vertical supply curve here because in the short run the seller will have a fixed supply of the good that they can sell with no opportunity cost. There’s a passage in which he explains why in Man, Economy and State I haven’t read it in a while so I can’t really recall. But I don’t really agree with the reasoning. Some mainstream textbooks will explain that in addition to there being a short run and a long run there’s a “very short run” (or something to that extent), think of Rothbard’s supply curve as being analogous to that.
Thanks! That makes sense. What would cause the supply curve to transition from vertical, to inclined and ascending to the right?
I will have to check out the Man, Economy, and State! Curves and models have always been my weak spot in my econ training, but Rothbard has a gift of making it all seem so simple.