Surrogate Demand/Economics

A detailed Summary of Surrogate Demand/Economics

By dividing consumer demands into two parts, direct demand and indirect demand, we can study demand theory in even more layers, hence possibly giving us greater future economic development. The needed addition to demand theory is as follows, consumer demand ought to be reviewed not as a monolithic concept but, rather, as consisting of two parts namely, direct demand and indirect demand, or as it has been termed surrogate demand. Surrogate means, one appointed to act for another. Total demand, therefore, would be equal to direct demand plus surrogate demand. So let's suppose the consumer is going into a local hardware store to purchase some grass seed. As a consumer, he or she is demonstrating direct demand, there is no third party (surrogate) involved in the transaction. On the other hand, when a consumer employs a professional landscaper to re-do his or her lawn, it is the landscaper who then determines the amount and direction of spending. The landscaper becomes the surrogate. There is a large quantity of surrogate-consultants of various kinds: lawyers, interior decorators, architects, financial managers and the like. With advancing technology, the individual consumer must rely more and more on surrogates of one kind or anoth

The personal consumption expenditures in our national income accounts are durable goods, nondurables, and services. Here there is no consideration given to the idea of direct versus indirect consumer spending. Clearly, the idea of surrogates being added to demand theory would benefit our calculations.

The concern in viewing consumer demand in this manner is not with the determinants of consumer choice, but rather the mechanism of spending on the linkage between total spending and its two components. The pricing of goods and services is likewise not in context. The concern is the impact of surrogates on total spending.

Some common words found in the essay are:
, direct demand, direct demand indirect, demand indirect demand, demand indirect, total spending, demand theory, consumer spending, surrogate demand, indirect demand, consumers firms government, national income accounts, firms government, individual consumer, buy buy, consumer demands direct,

Approximate Word count = 801
Approximate Pages = 3 (250 words per page double spaced)

Category: Miscellaneous

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