See also http://ecedweb.unomaha.edu/Dem_Sup/supply.htm
Explorations in Economic Demand, Part I
by Kim Sosin
Bob is really excited about next year at the University, which starts in two weeks! But his parents just dropped a bombshell: he is going to have to buy all of his own clothes for the fall semester. (And this is NOT a virtual university!) Oh no, he's never paid for his own clothes! And he really wants more of his favorite blue jeans (whose brand shall be nameless since we don't want to give plugs, but it does start with L and end with 501). Well, at least he knows his own TASTES! And Bob wants lots of pairs so he won't have to do laundry between visits home! Then Bob looks at his tattered and outdated sneakers and wonders how long they will last. What good are great blue jeans if the sneakers are too weird? Sigh. Time to do some research and figure out how to manage this.
"OK," Bob thinks, "I can figure this out. I'll just get on the Internet and find what I need to know. I wonder what the PRICES of blue jeans are these days? Perhaps the web site of a certain company L will have some information about the jeans and the prices."
Hmmm, Company L has lots of great graphics and information, but it doesn't post prices. Wonder why? Bob finds another web page that explains a bit about L's policies on retail pricing of jeans. This is useful information which tells Bob that he needs to do some price comparing. A bit more searching and there they are--The Western Store, Denim Blue Jeans Discounters, and even Bluejeans Company in UK--prices of exactly what he wants in both new and used. Additional sites can be found by using search engines. What are the range of prices from these outlets? Allright! Bob is ready to think about how many pairs he can buy.
Oops, he's not quite ready to plan how many pairs he can buy. "Let's see," thinks Bob. "Two more weeks of work before school starts and the part-time job has been paying an INCOME of about $200 per week. No way can I buy the 8 pair that would last from one home visit to another without hitting the laundromat. And then there is the issue of new sneakers (RELATED GOODS). Time to be realistic! For sure my rich older sister Jackie won't help me! Maybe I could talk to my boss, Tina, and work a few more hours to increase my EXPECTED INCOME. Hey, I'll bet they'll have a 'back to school sale' next week and EXPECTED PRICES will be lower. Maybe I should wait to buy some of the blue jeans."
Bob works an extra five hours this week and the blue jeans prices do come down by several dollars. He manages to buy 4 new pairs of blue jeans, new sneakers, and the shoe store throws in a new t-shirt to promote their sale. Bob has a gloriously successful first semester in his blue jeans and his economics class at the University!
For DiscussionBob considered every major element that determines how much of a product a buyer purchases.
1. Review Bob's decision process. What are these elements or determinants of amount purchased?
2. Consider each of these elements or determinants individually (one at a time): if that determinant increases, how does that affect the amount of the good that is purchased?
When you have finished, you are ready for the analysis section in Part II.
Maintained by Kim Sosin. Comment via EMail: ksosin at mail.unomaha.edu
Co-Director, UNO Center for Economic Education
Chair, Department of Economics
College of Business Administration
University of Nebraska at Omaha
Omaha, NE 68182