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In economics, induced demand – related to latent demand and generated demand [1] – is the phenomenon whereby an increase in supply results in a decline in price and an increase in consumption. In other words, as a good or service becomes more readily available and mass produced, its price goes down and consumers are more likely to buy it ...
Induced demand; Marchetti's constant, a corollary of which is that decreasing congestion may increase the distance people are willing to commute and so increase the traffic burden; Lewis–Mogridge position; Jevons paradox, an increase in efficiency tends to increase (rather than decrease) the rate of consumption of that resource
The argument begins from the observation that in equilibrium, total income must equal total output. Assuming that income has a direct effect on saving, an increase in the autonomous component of saving, other things being equal, will move the equilibrium point, at which income equals output to a lower value, thereby inducing a decline in saving that may more than offset the original increase.
In economics, supplier induced demand (SID) may occur when asymmetry of information exists between supplier and consumer.The supplier can use superior information to encourage an individual to demand a greater quantity of the good or service they supply than the Pareto efficient level, should asymmetric information not exist.
Investment, in turn, is assumed to be composed of three parts: = + + The first part is autonomous investment, the second is investment induced by interest rates and the final part is investment induced by changes in consumption demand (the "acceleration" principle). It is assumed that b > 0.
Trump's plan to 'drill. baby, drill' isn't likely to spark more oil production, lower gasoline prices, and help reverse inflation, analysts say.
Investment is often modeled as a function of interest rates, given by the relation I = I (r), with the interest rate negatively affecting investment because it is the cost of acquiring funds with which to purchase investment goods, and with income positively affecting investment because higher income signals greater opportunities to sell the ...
This is the investment that is crowded out. The weakening of fixed investment and other interest-sensitive expenditure counteracts to varying extents the expansionary effect of government deficits. More importantly, a fall in fixed investment by business can hurt long-term economic growth of the supply side, i.e., the growth of potential output ...