ABSTRACT
The lectures on demand theory have generally assumed that preferences, prices, income, and the quality of goods are all known with certainty, yet there is uncertainty about every product—from an orange to a surgeon to a political candidate. A pure decline in the insurance premium would increase the amount of insurance purchased because all demand curves are negatively sloped, and a pure increase in income would increase insurance in proportion to its income elasticity. Market demand curves are usually estimated by relating market consumption to the average price paid by different consumers. The cost is related to the foregone wage rate of the canvasser, and the gain is related to the reduction in price. The unit premium would be the price of insurance, the brokerage fee would be the price of speculation on the stock market, the bookie's "take" would be the price of betting on horse races, and so forth.
