The Probert Encyclopaedia of Money

DEMAND THEORY

Demand theory is an economic theory that concerns the relationship between the demand for goods and their prices; it forms the core of microeconomics. By plotting the quantities that an individual would purchase at different prices, a demand curve can be drawn. Summing the demand curves of individuals will yield a market demand curve, while summing the demands for all goods will in turn give an aggregate demand curve for an economy. In this way, a macroeconomic model can be built up from microeconomic data.
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