Q. While in any market there are lots of buyers and sellers, and these buyers and sellers have different
motivations, the motivations of the most important buyers are usually pretty understandable and adding them up
to understand the economy isn’t all that tough if one builds from the transactions up. What I am saying is
conveyed in the simple diagram below. This perspective of supply and demand is different from the traditional
perspective in which both supply and demand are measured in quantity and the price relationship between them
is described in terms of elasticity. This difference has important implications for understanding markets.