Suppose that people buy more of product X when the price is high, and less of product X when the price is low. Does that violate the laws of supply and demand?
The answer is no. It’s not maybe, or it depends, it is no, non, nein, nyet, bu shi, etc. And it doesn’t depend on what the product is, what the two prices are, what the two quantities are, the answer is always no. Now let’s consider why this is so confusing. Take two more examples: 1. In 2007 the price of copper soared to an all time high of $4.30 a pound. Consumers increased consumption and bought 26% more copper in 2007 than in 2006, when the price was $2.85. 2. In 2007 the price of copper soared to an all time high of $4.30 a pound. Producers increased production and sold 26% more copper in 2007 than in 2006, when the price was $2.85. Seeing them together, I think almost everyone can see what I am doing here. But suppose you showed these two statements to students in isolation. You asked 50 students if statement 1 was consistent with S&D, and you asked 50 students if statement 2 was consistent with S&D. I’ll bet that many more students would say that statement 1 is not consistent wi
