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.

Rising Farmland Prices

The New York Times reports that farmland prices are rising, even with one of the worst Midwest droughts in decades.  Part of the increase in price is due to lowering interest rates and risk in financial assets.  Thus the demand for farmland is in part due to the use of the land - growing agricultural products that are currently increasing in prices and part due to investment demand.

Christmas and the Law of Demand

The New York Times reports that this past Christmas (holiday) season we have seen many retailers use the law of demand to get consumers to purchase more Christmas (holiday) gifts - price.