Analysis of Markets
Our approach to market theory will be first analytic and then synthetic. To "analyze" something is to take it apart into its components. Common sense tells us that competitive markets work through an interaction of "supply and demand." Alfred Marshall compared the supply and demand sides to the two blades of scissors -- one won't cut by itself. You have to have both.
Accordingly, we will first "analyze" competitive markets, by discussing demand and supply separately. Then we will try to put them back together (synthesize them) in order to understand the working of competitive markets.
Thus, in the next few pages, we will look at
First, demand.
Demand
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