THE MOST COMMON JOURNALISTIC MISTAKE. A recent Principles of Microeconomics homework problem presented this challenge.
"The supply of hogs increased, leading to a fall in the price of pork. The drop in the pork price in turn increased the demand for pork. The increase in demand for pork led to an increase in price, so it is not possible to tell whether the price of pork rose or fell overall." Where did the writer get confused?
I make the only slightly-outrageous claim that I could randomly select a week's worth of newspaper business sections and find this mistake in print. Apparently I am not alone in being bothered by such confusions. Phil at Market Power catches a CNN reporter in a symmetrical error.
"A short supply increases demand...."
Apparently, so does an augmented supply.

William Polley picks up the story, suggesting that in some observers' minds, a rational-expectations tulip-mania might be at work.

For many the gut-level reaction is to think of gas lines.

The next step in their reasoning is that if gas shortages are on the horizon, then you'd better get in line now. Or, by the same token, if the price is expected to rise, you'd better buy your gas now. Either way, you arrive at the perfectly economically alid argument that an increase in the expected price (or an increase in the robability that the good will be unavailable in the future) causes an increase in demand now. I would be willing to bet that this sort of logic is what drives people to make a statement like that.

Possibly, althought the source of the confusion in many observers' minds might be in the terminology of introductory economics (and nowhere else in economics) itself.

Much of the discipline refers to the act of drawing a new demand or supply curve as a "change in demand (or supply)," sometimes calling that an "increase" or "decrease" in demand or supply. A new choice along the same demand or supply curve goes by the cumbersome locution "change in quantity demanded (or supplied.)" Bleah. I recommend the use of the term "shift" to describe the drawing of a new curve, and I'm continually reinforcing "left shift" and "right shift" as "increase" and "decrease" have the potential for mischief on the supply curve. A new choice along the same curve is a "movement along." (Synonms such as "slide along" are permissible on homeworks and exams.) In any graphing exercise, there is at most one shift per figure.

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