For any market, or for any economy, if you know the total amount of money (or credit) spent and the total
quantity sold, you know everything you need to know to understand it. For example, since the price of any good,
service or financial asset equals the total amount spent by buyers (total $) divided by the total quantity sold by
sellers (total Q), in order to understand or forecast the price of anything you just need to forecast total $ and total
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.