Of Death and Taxes and Substitutes

All of us who have studied economics in the most rudimentary way know that as prices pass the peak of demand volume of sales begin to show a diminution of return. As prices go up, sales fall. We also know that price affects opportunity. That is that consumers have limited amount of funds to spend on a purchase, they can either spend all of their money on one thing or they can spend the limited funds they have on more than one other thing. There are also economic factors in dealing with choices over the same product or commodity and the choices between substitutable products.

The first, choices over the same product, is a simple concept to understand since most shoppers do this quite naturally. If there were two cabs in front of you (and we assume you need a cab), one with the advertisement on the door of $1.50 and another for $3.00, and from all the information you could gather they offered the same exact service, which service would you choose? Almost everyone faced with this scenario would choose the cab with the $1.50 price.

The second, choices between substitutable or alternative products, is easily understandable. If you like getting pizza for dinner on Wednesday nights at a pizza parlor on your way home and the pizza costs $4.00 a slice, even though at the money you make $4.00 a slice is hard to afford. You eat pizza, but don