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as seen by Demand Curves

Demand is "the quantity of a commodity that will be required at any given price over some given period of time". "For the majority of the goods and services, experience shows that the quantity demanded will increase as the price falls." (Stanlake 155) This characteristic can be shown by a demand curve. A demand curve is a graphical representation of the data in table with values of demand called a demand schedule. A good that is in greater demand do to income increases is known as a normal good. A inferior good is a good that is in less demand even though the income increases. When this situation occurs the demand curve is positive sloping. A giffen good is a special type of inferior good where demand increases when price increases. The graph below is a sample demand curve, where the demand schedule for the quantity of toilet paper demanded is graphed.

From this graph we can determine how many rolls of toilet paper will be purchased at what price. As can be seen from looking at this graph, it is negatively sloping. As one variable gets larger the other will become smaller, or when the price drops more is purchased. The whole demand curve "theory" is based on human behavior. It is logical to say that people will purchase more of a product when the price is cheaper.

In reality, if the price of a good rises the income (or assets) of the consumer will decrease. The people would not be able to buy the same goods as before because they cost more. Consumers can do two things; if the good is a normal good (previously defined), they would buy less of the good; if the good is an inferior good, they would buy more of the good. Thus, the income effect can be defined in this statement: When the price of a good falls, the expected outcome would be that the consumers would buy more because they have the money and can afford to buy more.

The slope of the demand curve can be explained in terms of the income and substitution effects.

If the price of a good falls consumers would buy more of that good and less of others. If the price of a good rises people would buy less of that good and more of another because the good is more expensive than others. The outcome of these would be a switching of purchases towards the cheaper product. When there is another similar good that is in price competition with an existing good, it is known as the substitution effect. Most demand curves slope downwards from left to right and therefore obey the general law that more goods would be demanded at lower prices. However there are certain demand curves that do just the opposite and slope in the other direction, which will be explained later.

For a normal good the substitution and income effects both go in the same directions. A rise in the price reduces in the quantity demanded because the price has risen. For a inferior good, the substitution effect and income effect go in opposite directions. Although, the substitution effect is stronger than the income effect because with a inferior good, when the price rises it leads to a fall in demand. When a good changes in price, the quantity demanded will be changed by the sum of the substitution effect and the income effect.

There are, however, cases that do not follow this path of the demand curve. From what had been previously explained, there have only been demand curves with a downward slope. This is not the case with all demand curves. There are a few cases that do the opposite and have an upward slope. An example of this graph is shown below.

The most important example of this exception in demand curves is provided by the demands for food such as bread, rice, corn, and potatoes in countries with very low living standards. Most of the families income would go towards food. In conditions like these, an increase in the price of a food could lead to an increase in the quantity demanded. If the families income ... more

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Treaty of Versailles

The end of World War I was finalized by the signing of the Treaty of Versailles on June 28, 1919.  It was signed by Great Britain, France, Italy, and Japan but not the United States, as the U.S. drafted its own treaty with Germany in 1921.  Many historians argue that the Treaty of Versailles was the major cause of World War II which occurred twenty years later.  On the Treatys most superficial level, the extreme punishment and fines that were levied by the Allied Powers on the Germans were causes enough for war.  Historians argue that this and the international fallout that resulted most notably with the United States were simply too powerful to avoid war at all.  The ramification of the Treaty sent the German economy into a severe depression and planted the seeds needed to sprout revenge and uprising such as the world had never seen before.
 Estimates for the costs of the war for the Allied Powers fluctuated between ten billion and one hundred billion dollars.  Ultimately, the Allied Powers settled on the astronomical sum of thirty-three billion dollars which the German government was mandated to pay but simply did not have the funds to do so.  In addition to paying reparations, Germany had to severely limit military spending and personnel, relinquish land previously gained in the World War, and was barred from having any air force at all.  The lack of American involvement, which was sorely needed at this time, had significant impacts on the actions of other key states.  Sudden American withdrawal from the Treaty of Versailles sent France into a panic and their subsequent occupation of the Ruhr Valley in Germany.  This action dealt a harsh blow to the Germany and British-French relations.  The former came into economic conflict with France, creating hyper-inflation, and throwing Germany into a severe depression.  Wheelbarrows of money were necessary to buy loaves of bread until the Deutsche Mark became so devalued that the bills were burned to provide heat to those living in poverty.  
Following this collapse in German currency, a desperate and vulnerable Germany capitalized on the breakdown of relations between Britain and France and United States isolationism to begin rebuilding.  This included rearmament that was in direct violation of the Treaty of Versailles.  The dictator behind this proposed revitalization in economic and military strength was Adolf Hitler.  Current economic hardship made Germany ripe for the rise of a dictator.  Hitlers timing was impeccable and he perhaps never would have gained such prominence in the German government if it was not for his propaganda that the weary and desperate German people needed so badly to recover from their depression.  The depression however, was not contained within German borders.  The politics of the era, most notably Americas isolationist policy contributed to world wide economic collapse.  This was the result of then President Woodrow Wilsons inability to persuade Congress to ratify the Treaty of Versailles and become a co-signer with the other Allied Powers.  The major failure in Wilsons pitch came in his proposal of the Fourteen Point Plan.
The Fourteen Point Plan outlined Wilsons view of what the post-WWI world should look like, providing for the liberation of certain peoples and territories.  Presented to Congress on January 8, 1918, strong debate ensued over the proposal of the fourteenth and final provision; a general association of nations must be formed under specific covenants for the purpose of affording mutual guarantees of political independence and territorial integrity to great and small states alike.  Congress voted against what Wilson dubbed the League of Nations, the failed basis of todays United Nations.  Although the U.S. proposed the League, they were the most notable nation that failed to join.  The U.S. subsequently retreated to a policy of isolationism and combined with a rebuilding and weakened Europe, there was little opposition to Hitlers rise to power and continued violation of the Treaty of Versailles.  
The rest of the world exercised a policy of appeasement, allowing Hitler to make small advances in Europe hoping that he would be satisfied with what he was given.  He became emboldened as each of his new advances into Europe met little to no opposition in the international community.  He ... more

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  • S: Demand Curves S: Demand Curves Demand Curves Demand is the quantity of a commodity that will be required at any given price over some given period of time. For the majority of the goods and services, experience shows that the quantity demanded will increase as the price falls. (Stanlake 155) This characteristic can be shown by a demand curve. A demand curve is a graphical representation of the data in table with values of demand called a demand schedule. A good that is in greater demand do to income increases is known as ...
  •  : Treaty of Versailles : Treaty of Versailles Treaty of Versailles The end of World War I was finalized by the signing of the Treaty of Versailles on June 28, 1919. It was signed by Great Britain, France, Italy, and Japan but not the United States, as the U.S. drafted its own treaty with Germany in 1921. Many historians argue that the Treaty of Versailles was the major cause of World War II which occurred twenty years later. On the Treatys most superficial level, the extreme punishment and fines that were levied by the Allied Powers on t...
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