Wednesday, January 30, 2013

The Law of Demand - Baggage Fees

The law of demand is one of the most simple, yet important ideas in economics.  It states that when prices rise, consumers tend to purchase less and when prices fall, consumers tend to purchase more.  The New York Times has a nice article on the effect of baggage fees (i.e. price) on the number of bags travelers bring on airplanes.  As we see from the article, airline travelers are bringing on fewer bags, which is exactly what we would expect from the law of demand.

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