A simple example for the teaching of demand theory: Aggregate demand estimation for onions in India

Managerial economics textbooks rarely include empirical examples of demand estimation of any commodity from real data, perhaps because in reality one must consider coupled demand systems. We suggest that on a national level and over a short time, the price–volume data for onions provide a bona fide example of a single-commodity demand curve. Since the onion has no real substitutes and taste for onions does not fluctuate, the demand curve does not shift over time. Empirical analysis of aggregated national level data yields a demand curve with two regimes: constant consumption at low prices, and constant budget at high prices.