ABSTRACT
A theory always requires a model: a system of relations which simulate the behaviour of the real world and are sufficient to determine all the relations which appear in them, subject to arbitrary values of the parameters on which the form of the relations depends. The condition of equilibrium permits us then to determine the price and the quantity traded subject to the given values of the parameters, and to trace the reactions of the former to an arbitrary change in the latter. The more relations and variables is taken into account, the more comprehensive is the model in the sense that the greater is then the number of unknowns which are simultaneously determined and the more basic are the parameters. More comprehensive models may be compared to automatic tools which do their work very efficiently indeed, provided only that they exactly fit the job. Simple supply and demand models are of the axe-and-hanimer variety.
