Description 
The narrator interviews Max to explore the intuitive derivation of demand. 

Audio Transcript 

Narrator:  You like those Ostrich Burgers a lot don't you? 

Max:  Ah huh. 

Narrator:   I see that when the price of O-burgers was $2, you bought 3 of them. 

Max:  Ah huh. 

Narrator:  Max,  if the price of O-Burgers were to drop, would you buy more of them? 

Max:  That depends 

Narrator: On what? 

Max:  Would the price of O-Nuggets drop also? 

Narrator: No, everything remains the same, except burger prices go down to one dollar. Would you buy more burgers? 

Max: (excitedly) Yeah, I'd buy five at that price! 

Narrator: Now, what if Marge were to raise her prices on O-burgers to $3? How many would you buy? 

Max:  Uhhh...one 

Narrator:  Max's behavior demonstrates the law of demand, which states that, with other things being equal, the quantity demanded of a product is inversely related to its price. 

Narrator:  When the price of O-burgers drops relative to other products, Max consumes more burgers, and when the price rises he consumes fewer. 

Narrator:  Max, If the price of O-Burgers decreased, you'd be able to buy more burgers.  Would you? 

Max:  Ah huh 

Narrator: Price changes affect Max's purchasing power. He can buy more when price goes down, and less when price goes up. This is referred to as the income effect… 

Narrator: Max, you like Nuggets too, right?... 
So if Marge raised the price of burgers, would you substitute some nuggets for some burgers? 

Max:  ah huh 

Narrator:  This is known as the substitution effect.  An increase in the price of Burgers makes Nuggets relatively cheaper. Burgers and Nuggets are substitute goods. Therefore, Max is willing to buy some nuggets instead of burgers when the price of Burgers increases. 

Narrator: Thank you Max, you can go eat your burgers now. 
 
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