Marshallian demand

When we want to buy something, we usually think about how much we want to buy and how much we are willing to pay for it. This is called demand. Marshallian demand is a fancy term that means the way we decide how much of something we want to buy and how much we are willing to pay for it.

Let's take an example. Imagine you really love ice cream. When you go to the ice cream shop, you have to decide how many scoops of ice cream you want and how much you are willing to pay for it. Marshallian demand helps you figure out that number.

First, you might think about how many scoops of ice cream you really want. Maybe you want one scoop, maybe two, or maybe three! Your desire for ice cream is called your "utility." The more you want something, the higher your utility is.

Next, you have to think about how much money you have to spend. Maybe you only have $1, so you can only afford one scoop of ice cream. Or maybe you have $3, so you can afford three scoops of ice cream. The amount of money you have to spend is called your "budget constraint."

The final step is to find the right balance between how much ice cream you want (utility) and how much you can afford (budget constraint). In other words, you have to find the sweet spot where you get the most enjoyment out of your money. This is called the "optimal consumption bundle."

So, marshallian demand is all about figuring out how much of something you want to buy and how much you are willing to pay for it, based on your utility and budget constraint. It's like a math problem where you have to solve for the best solution!