See perfect competition.
Theoretically, the 'lead time' it takes for a producer to change supply to deal with shifting demand is not relevant on a market when there is a sufficiently large number of producers and consumers (there also is no real shifting demand on a market with perfect competition).
When people talk of a "shift" in demand or supply they normally refer to a movement of the whole curve. So half the time "demand" refers to the whole "demand curve" and the rest of the time it refers to a quantity (apparently, to "consumption"). Similarly Supply" can refer to "supply curve" or to "production". We have met the enemy, and he is us — Pogo
The point is, of the model only the intersection of the curves, that is, the clearing price and the production = supply = demand = consumption are observable. We have met the enemy, and he is us — Pogo
The idea that economic theory is necessarily about prediction, like celestial mechanics applied to planets, is the source of much confusion. "Economists can't predict recessions, so what do they know?" The answer is that, in principle, they could know a lot, yet never predict a price or an economic fluctuation.
That economists commonly think they know many things that aren't actually true is a different issue. Words and ideas I offer here may be used freely and without attribution.
