He includes this first graph that shows water consumption at different prices for several different developed countries:
Notice the "Quantity" is on the vertical axis and "Price" is on the horizontal axis. In economics (by tradition) when we plot demand (or supply) we do the reverse---Price on the vertical, Quantity on the Horizontal.
To put it terms that an introductory econ student can better visualize, I took the plotted points on the graph, reversed the axis, and replotted the points to derive a traditional demand curve as we would recognize from a textbook. That is below.
The Demand Curve DOES slope downward!
PLEASE NOTE: I did this by hand "eyeballing" the points so it is not absolutely correct but I hope relatively correct for the most part. Also, the RED Demand curve I drew is not necessarily mathematically correct either---eyeballed as well. I accept there is a margin of error! :)
Three countries are outliers compared to the rest: the US, Australia and Canada.
Side by side, both of these help me visualize the issue better. I hope it does for you as well.
Interesting! Turn that graph around.
ReplyDelete"Price on the vertical, Quantity on the Horizontal."
Economists say things like "long run supply is vertical" [I'm not sure I have that right, it's an example] and you have no idea what they might mean unless you know price is always on the vertical axis. Took me quite a while to figure that out.