Transacting the Elixir of Life
Chapter 4: Some basic tools of economics: consumer behavior and demand
Economics is about decision making, and every type of decision maker involved with wine is the focus of a field in economics; all the choices described in Chapter 2 involve economics. One way to learn about the economist’s analytic tools is to review the field in the order in which most of us have learned about wine: we start with the economics of the consumer and consumer demand and study the demand side of transactions. We move next to wine production—the nature of the organization, or firm, that produces wine and the industry of which it is a part. In the sense that a transaction requires simply a buyer and a seller, this is the seller, or supply, side of the market. Chapter 3 discussed the logic of transacting, and this chapter and the next look more closely at the logic of behavior on either side of the transaction.
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