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===The cobweb model=== {{main|Cobweb model}} [[Nicholas Kaldor]] proposed a model of fluctuations in agricultural markets called the [[cobweb model]], based on production lags and [[adaptive expectations]]. In his model, when prices are high, more investments are made. However, the effect of these investments is delayed due to the breeding time - the production lag. Eventually, the market becomes saturated, leading to a decline in prices. Production is thus decreased and again, this takes time to be noticed, leading to increased demand and again increased prices. The cycle continues to repeat, producing a supply-demand graph resembling a cobweb. The model has also been applied in certain labour sectors: high salaries in a particular sector lead to an increased number of students studying the relevant subject; when these students enter the job market at the same time after several years of studying, their job prospects and salaries are much worse due to the new surplus of applicants. This in turn deters students from studying this subject, producing a deficiency and higher wages once again.
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