It's almost impossible to go for any length of time, without hearing someone speak of demand and supply, or the law of supply and demand. Even though some of these people have no idea what they're talking about, you will find that these concepts are very simple, and yet very powerful and useful.

   Demand refers to the relationship between the market price and the desired quantity demanded. Keep in mind the idea of desired quantity demanded. We must consider the quantity that would be demanded at all prices, not just at today's actual market price. For example, we might want to know what would happen to the sales of new cars if the price fell by 10%. Even if this never happens, we can still talk about how many cars people would like to buy, or the desired quantity demanded if the price fell (or rose) by 10%.

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