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Macrocompassion's comments

Macrocompassion's pictureMacrocompassion said on 04 January 2017

When there is a change in the market price the quantity of goods being exchanged for money will change. When alternate producers are making something similar, their proportion of the market will also change so that in all, the about or exactly same sum of money as before is being used by the consumers, only what and how many of what they buy is different. As far as the microeconomic situation is concerned this is significant for each firm, but in macroeconomics the aggregate effect is very small or even nil.

The implication is that unlike microeconomics, the macro-kind can be treated as if it were a physical situation without its complex behavour necessarily being included. As in gas physics, its not the molecules (of a confined volume of gas) that should be used in a calculation of the relationships between temperature, pressure and density, but the simplified gas laws (of Boyle and Charles).

This aspect of analysis in econophysics needs to be included in the subject as a whole. The amount of statistical analysis presently being described and discussed is less likely to provide the more useful overall effects, never-the-less it is about the physical relationships as well as basic economics of the social system that our interest lays.