University Economics: Annotated Bibliography on Price and Demand

This annotated bibliography examines the complex relationship between price and demand in economics, analyzing how price influences consumer behavior and market dynamics. It includes a range of sources that provide a variety of perspectives on the topic. Azevedo and Leshno's work highlights the inverse relationship between price and demand, while also acknowledging exceptions such as substitute goods. Forstall offers a counter-perspective, using Apple products as an example of how demand can increase with higher prices due to status symbols. Saintvilus's newspaper article supports this, claiming that the demand for luxury goods like iPhones may not decrease with price increases. Singh's article explores inferior and Giffen goods, where price reductions do not always lead to increased demand. Lorenzatti's article discusses how demand can influence price, using the example of coffee beans. The bibliography provides a comprehensive overview of the various factors influencing the relationship between price and demand.

Running head: BIBLIOGRAPHY
Bibliography
Name of the Student:
Name of the University:
Author note:

1
BIBLIOGRAPHY
Azevedo, E.M. and Leshno, J.D., 2016. A supply and demand framework for two-sided
matching markets. Journal of Political Economy, 124(5), pp.1235-1268.
Azevedo and Leshno have clearly stated that lower price does always imply greater
demand. This is simply because as and when a good is sold at a cheap and affordable rate, the
consumers are able to get more value for their money, resulting in ‘consumer surplus’. The
authors rightly state that this may not hold truth for substitute goods. For example, even if a box
of Coffee is charged low, if the price of Tea is still lower, people would prefer to buy the
substitute goods only. However, they also refer to the Demand Curve which clearly demonstrates
an inverse relation between the price of a commodity and the demand of the same.
One major strength of the article is that the authors have explained the inverse relation
between demand and price of a commodity with the help of economic theories, especially the
theory of Demand Curve that helps in explaining the scenario in a more effective way. The
authors also refer to various cases, where the demand for a product has been found to increase
with the reduction of price. This adds to the credibility of the research. However, the weakness
of the article is that it does not consider the case of Veblen goods and Giffen goods which are
exceptions to this concept.
Forstall, T., 2017. Forbes Welcome. [online] Forbes.com. Available at:
<https://www.forbes.com/sites/timworstall/2012/08/21/the-limit-to-apples-value-are-they-a-
veblen-good/#4bc3712cd9f3> [Accessed 18 Aug. 2017].
Forstall offers a counter-perspective to the well-known theory of economics regarding the
relation between price and demand of a good. Forstall refers to the Apple products and shows

2
BIBLIOGRAPHY
how even if the price goes up, consumers will buy the product. Similarly, he also explains that if
the price goes down, it may decrease demand of the goods. The reason behind this is the Apple
products are regarded more as status symbols rather than necessary products. Hence, Forstall
claims people will tend to consume them only if these are priced higher than the rival products.
Consequently, a fall in the price will not prove how “rich and tasteful” these consumers are, and
hence with the fall in price, consumer demand will not necessarily increase.
A major strength of the article lies in the way it offers a counter-perspective to the
established economic theory of price and demand. The article challenges the traditional theory,
but it could draw on more examples, as it only refers to the Apple products, and thus the
argument becomes weak. The article however is a bit biased in style, as it does not consider the
exception. When the price increases, the middle income buyers will demand more of the
expensive product even though the higher class may not demand it as before.
Saintvilus, R., 2017. Yes, I Would Pay $1,000 for an Apple Inc. (AAPL) iPhone 8. [online]
InvestorPlace. Available at: <http://investorplace.com/2017/08/yes-i-would-pay-1000-for-
an-apple-inc-aapl-iphone-8/#.WZaCs1UjHIU> [Accessed 18 Aug. 2017].
Saintvilus in this newspaper claims that even if the price of an I Phone will increase, he
will not still think of stopping to consume the product. He states that I Phone has become more
of an obsession for many, and considering the social status associated with it, people will not buy
it at a low price.
The newspaper argues that the price reduction will not essentially imply demand
increase, and this is especially true in case of luxury and status commodities. The newspaper

3
BIBLIOGRAPHY
article lacks critical depth and theoretical framework that is the only weakness of the article.
Otherwise, the article is well-structured.
Singh, J., 2017. Price Demand Relationship: Normal, Inferior and Giffen Goods. [online]
Economics Discussion. Available at: <http://www.economicsdiscussion.net/cardinal-utility-
analysis/price-demand-relationship-normal-inferior-and-giffen-goods/1069> [Accessed 18
Aug. 2017].
The author argues that in case of an Inferior good, the reduction in price will not always
lead to the increase in demand. There are inferior goods which according to Singh are known to
be consumed by people of lower social status. As a result, the demand increase on price
reduction of these products will entirely demand on the income of the consumer. In case the
consumer income increases, he will not think of buying the inferior good even if the good is
charged at a low price.
The argument is wells-structured and offers a comprehensive insight into the different
types of goods, such as inferior goods and giffen goods. The author thoroughly discusses nad
explains why the theory of demand curve does not hold truth in all situations. The content is
unique as it explains the importance of income effect in determining the relation between
consumer demand and price reduction of a commodity. However, while explaining the inferior
goods, the author refers to possible exceptions of this situation, and yet has not explained the
exceptions well.
Lorenzatti, L., 2017. Americans' Coffee Guzzling Is Pushing Bean Prices Higher. [online]
Fortune.com. Available at: <http://fortune.com/2016/07/01/americans-coffee-prices/>
[Accessed 18 Aug. 2017].

4
BIBLIOGRAPHY
In the article, the author argues how even if price does not influence quantity demanded,
quantity demanded will be more likely to influence price. Referring to the Arabica of coffee
beans of USA< the author rightly claims how the product being unique has a higher demand, that
in turn will result in higher price. In other words, the price will not be low and yet the consumers
will be responsible for the same.
The article offers a unique perspective and shows how often the price does not determine
the quantity demanded, rather the situation can turn out the other way round. This content is
unique as it deconstructs the economic theory of demand curve and shows quantity demanded
has a greater impact on price.

5
BIBLIOGRAPHY
Bibliography:
Azevedo, E.M. and Leshno, J.D., 2016. A supply and demand framework for two-sided
matching markets. Journal of Political Economy, 124(5), pp.1235-1268.
Azevedo, E.M. and Leshno, J.D., 2016. A supply and demand framework for two-sided
matching markets. Journal of Political Economy, 124(5), pp.1235-1268.
Lorenzatti, L., 2017. Americans' Coffee Guzzling Is Pushing Bean Prices Higher. [online]
Fortune.com. Available at: <http://fortune.com/2016/07/01/americans-coffee-prices/> [Accessed
18 Aug. 2017].
Saintvilus, R., 2017. Yes, I Would Pay $1,000 for an Apple Inc. (AAPL) iPhone 8. [online]
InvestorPlace. Available at: <http://investorplace.com/2017/08/yes-i-would-pay-1000-for-an-
apple-inc-aapl-iphone-8/#.WZaCs1UjHIU> [Accessed 18 Aug. 2017].
Singh, J., 2017. Price Demand Relationship: Normal, Inferior and Giffen Goods. [online]
Economics Discussion. Available at: <http://www.economicsdiscussion.net/cardinal-utility-
analysis/price-demand-relationship-normal-inferior-and-giffen-goods/1069> [Accessed 18 Aug.
2017].