Economics Dictionary of ArgumentsHome
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| Demand: In economics, demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices. It is represented by a demand curve, which shows the inverse relationship between price and quantity demanded. See also Price, Markets._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Demand - Dictionary of Arguments
Rothbard III 152 Demand/Rothbard: An increased supply schedule, by lowering price, induces the market to demand the larger quantity offered. This, however, is not an increase in the demand schedule, but an extension along the same demand schedule. It is a larger quantity demanded in response to a more attractive price offer. This simple movement along the same schedule must not be confused with an increase in the demand schedule at each possible price. >Supply/Rothbard, >Price/Rothbard, >Stock keeping/Rothbard. Rothbard III 151 Supply/Rothbard: It is important to be on one’s guard here against a common confusion over such a term as “an increase in demand.” Whenever this phrase is used by itself in this work ((s) i.e. Rothbard. 1962. Man, Economy and State) it always signifies an increase in the demand schedule, i.e., an increase in the amounts that will be demanded at each hypothetical price. This “shift of the demand schedule to the right” always tends to cause an increase in price. It must never be confused with the “increase in quantity demanded” that takes place, for example, in response to an increased supply. Rothbard III 238 Demand/Rothbard: The money price is determined by actions decided according to individual value scales. Example: At any market price of six grains or under, he will exchange these grains for the butter; at a market price of seven grains or over, he will not make the purchase. His maximum buying price for a second pound of butter will be considerably lower. This result is always true, and stems from the law of utility; as he adds pounds of butter to his ownership, the marginal utility of each pound declines. Rothbard III 239 On the other hand, as he dispenses with grains of gold, the marginal utility to him of each remaining grain increases. Both these forces impel the maximum buying price of an additional unit to decline with an increase in the quantity purchased. From this value scale, we can compile this buyer’s demand schedule, the amount of each good that he will consume at each hypothetical money price on the market. >Price/Rothbard. Rothbard III 240 Demand curve: (…) because of the law of utility, an individual demand curve must be either “vertical” as the hypothetical price declines, or else rightward-sloping (i.e., the quantity demanded, as the money price falls, must be either the same or greater), not leftward-sloping (not a lower quantity demanded). Demand schedule: If this is the necessary configuration of every buyer’s demand schedule, it is clear that the existence of more than one buyer will tend greatly to reinforce this behavior. (…) the value scales of the buyers will almost always differ, which means that their maximum buying prices for any given pound of butter will differ. The result is that, as the market price is lowered, more and more buyers of different units are brought into the market. This effect greatly reinforces the rightward-sloping feature of the market-demand curve. >Supply/Rothbard, >Equilibrium price/Rothbard. Rothbard III 247 Demand curve/stock keeping/Rothbard: It is characteristic of the total demand curve that it always intersects the physical stock available at the same equilibrium price as the one at which the demand and supply schedules intersect. The Total Demand and Stock lines will therefore yield the same market equilibrium price as the other, although the quantity exchanged is not revealed by these curves. They do disclose, however, that, since all units of an existing stock must be possessed by someone, the market price of any good tends to be such that the aggregate demand to keep the stock will equal the stock itself. Then the stock will be in the hands of the most eager, or most capable, possessors. These are the ones who are willing to demand the most for the stock. That owner who would just sell his stock if the price rose slightly is the marginal possessor: that nonowner who would buy if the price fell slightly is the marginal nonpossessor.(1) >Stock keeping/Rothbard. Rothbard III 250 Demand schedule: What are the determinants of the demand and supply schedules themselves? Can any conclusions be formed about the value scales and the resulting schedules? >Speculation/Rothbard. Rothbard III 252 (…) we have still not explained the rankings of the good on the seller’s value scale and the rankings of money on the buyer’s. Rothbard III 256 Demand schedule: the general factors that determine the supply and demand schedules of any and all consumers’ goods, by all persons on the market, are the balancing on their value scales of their demand for the good for direct use and their demand for money, either for reservation or for exchange. (…) it is evident that decisions to invest are due to the demand for an expected money return in the future. A decision not to invest (…), is due to a competing demand to use a stock of money in the present. >Demand schedule. 1. The proof that the two sets of curves always yield the same equilibrium price is as follows: Let, at any price, the quantity demanded = D, the quantity supplied = S, the quantity of existing stock = K, the quantity of reserved demand = R, and the total demand to hold = T. The following are always true, by definition: S=K–R T=D+R Now, at the equilibrium price, where S and D intersect, S is obviously equal to D. But if S = D, then T = K – R + R, or T = K._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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