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Does Supply Create Demand or Does Demand Create Supply?
You invent a brand new product and you believe it will sell. You created it because you believe there is an existing demand or there will be a demand for it. Right?
Who would invest their time and resources in something they did not believe will sell? Yes some ideas are silly and do flop. But when the person(s) were making their product they did not see it that way.
Example: A Hollywood movies that costs millions and millions to make and the viewing public does not buy tickets to see it.
1 Answer
- Anonymous5 years ago
Originally, supply crates its own demand. This has become the foundation of the the multiplier effects in the Keynesian model. The meaning is that an investment to create supply will create jobs, you pay for factors of production. This will create income for the next round which will be generated further.