Economics @ ITT

The gross substitution axiom meets reality

Posted in economics by ittecon on August 16, 2014

The gross substitution axiom assumes that if the demand for good x goes up, its relative price will rise, inducing demand to spill over to the now relatively cheaper substitute good y. For an economist to deny this ‘universal truth’ of gross substitutability between objects of demand is revolutionary heresy – and as in the days of the Inquisition, the modern-day College of Cardinals of mainstream economics destroys all non-believers, if not by burning them at the stake, then by banishing them from the mainstream professional journals

via The gross substitution axiom — the backbone of mainstream economics | LARS P. SYLL.