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Wednesday, February 13, 2013

Demand


Demand

The other day my son, David Junior, bought me a Macroeconomics Bar Charts. He did this because he noticed I was studying Macroeconomics and listening to lectures from Lecture King on Macroeconomics.

When we speak of demand in economics we are talking about all the demand in the market. That is, all the demand for a particular good worldwide. This is an oversimplification, but just for the sake of making the point here.

Basically, demand is the total amount of goods consumers want at a particular price point. If the price of a good goes up, Ceteris Paribus, the demand for that good goes down. When the price of gas goes up people try to find ways of not having to use so much gas. They combine trips or buy more fuel efficient cars or whatever they can do to purchase less.
If the price of a good drops, Ceteris Paribus, the demand for that good increases. When the price of gas is lower than normal, people drive more.
When the price of beef goes up, the demand for beef goes down.

I remember one time I was in the grocery store during a time that tomatoes were way overpriced. An elderly woman looking at the tomatoes said, “These tomatoes must be made of gold. “ She did not purchase any tomatoes that day.






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