The demand curve
Demand is defined as the quantity of a commodity that a consumer is willing and able to buy in the market, keeping other things constant (Ceteris paribus). For example, a consumer demands 5 kg of sugar in a month at a price of rupees 40 per kg.
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What is quantity demanded?
Quantity demanded refers to a specific quantity of a commodity that a consumer will buy at a specific price of that commodity. For example, consumers will buy 3 units of good X at a price of Rupees 6.
Difference between demand and desire
Demand includes willingness and ability to pay, whereas, desire means only willingness, it is not backed by the ability to pay.
What is demand curve?
It is a graphical representation of a relation between the price of a good and it’s the quantity demanded. It is negatively sloped which means there is an inverse relationship between price and quantity demanded. For example, if the price of a good rises the consumer will demand less. Similarly, if the price of a good falls, the consumer will demand more.
To draw a demand curve, we need a demand schedule.
The demand schedule is a table representing the negative relationship between the price and quantity demanded. As shown below:
Below is the demand curve. On x-axis, we represent quantity demanded and on Y-axis we show price.
Types of demand schedule with there curves
- Individual Demand Schedule – It refers to the demand schedule of an individual in the market. It shows the quantities of a commodity which an individual will buy at different prices of that commodity, at a particular point of time.
- Individual demand table:
|Price of good X||Quantity of good X|
- Individual demand Curve – It is a curve showing the different quantity of a commodity that one particular buyer is ready to buy at different possible prices of a commodity at a particular point of time. A graphical representation is shown below:
- Market demand curve – It is a table showing different quantities of a commodity that all buyers in the market are ready to buy at different possible prices of the commodity at a particular point of time.
|Price of Good X||Quantity demanded by Consumer A||Quantity demanded by Consumer B||Market demand = Demand of A + Demand of B|
Market Demand Curve – It is a horizontal summation of individual demand curves. It shows various quantities of a commodity that all the buyers in the market are ready to buy at different possible prices of a commodity at a particular point in time. As shown below:
What is the slope of a demand curve?
The general formula for finding the slope of any curve is changing in Y/ Change in X. According to the demand curve shown below, applying the formula:
The slope of the demand curve = Change in price/ Change in quantity demanded.
You can read more related posts:
- Introduction to Economics
- What do you mean by an economy?
- What are the Central problems of the economy?
- Production Possibility Curve
- What causes PPC to shift?
- What does the opportunity cost mean?
- The point on and off the Production Possibility Curve
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