Suppose prices in a market are set by supply and demand. We would like to know the equations for the demand function and the supply function. But the equation we get by regressing quantity on market price cannot generally be identified as specifically the demand function or the supply function. In special cases we can use regression to get the demand function or the supply function but not both. For example, suppose the supply function is subject to random shifts but the demand function remains fixed. Then equilibrium points of price and output will lie on the demand curve and consequently a regression of quantity on price will give us the demand function. On the other hand, if demand is subject to random fluctuations and the supply curve remains fixed then each market equilibrium combination of price and output will lie on the supply curve and consequently a regression of output on price will give us the supply curve. But when both the demand and supply cuves are subject to random fluctuations the regression of output on price is neither the demand curve nor the supply curve. The situation is shown in the three graphs below. In the diagrams the green lines represent the true market supply schedules, the blue lines the true market demand schedules and the red line the regression line for price and quantity.