Wednesday, April 7, 2010

Upward Sloping Demand Curves

There is an excellent discussion of upward sloping demand curves over at EconomistsDoItwithModels. What I enjoyed was that it included discussions of both Geffen goods and Veblen goods. Her comment about the lack of empirical examples was also noteworthy for me.

It might be helpful when presenting demand in the micro portion of your course.  And if not, it's still interesting, because there are always students who confuse shifts in the curve with moving along the curve.  These are the students who will offer examples of higher prices resulting from increased demand creating shortages.  They often believe that somehow the curve for the product or service they are talking about has gotten kinked at some point and now slopes upward.  But what is usually the case is either the supply curve has shifted left or the demand curve has shifted right, or some combination of the two.  The result is higher prices.

Let me know what you think.

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