Introduction to Demand
- Demand is the amount of a good/service that a consumer is willing and able to purchase at a given price in a given time period
- If a consumer is willing to purchase a good, but cannot afford to, it is not effective demand
- If a consumer is willing to purchase a good, but cannot afford to, it is not effective demand
- A demand curve is a graphical representation of the price and quantity demanded (QD) by consumers
- If data were plotted, it would be an actual curve. Economists, however, use straight lines so as to make analysis easier
- If data were plotted, it would be an actual curve. Economists, however, use straight lines so as to make analysis easier
- The law of demand states that there is an inverse relationship between price and quantity demanded (QD), ceteris paribus
- When the price rises the QD falls
- When the price falls the QD rises
Individual and Market Demand
- Market demand is the combination of all the individual demand for a good/service
- It is calculated by adding up the individual demand at each price level
- It is calculated by adding up the individual demand at each price level
The Monthly Market Demand for Newspapers in a Small Village
Customer 1 |
Customer 2 |
Customer 3 | Customer 4 | Market Demand |
30 |
|
4 |
4 |
53 |
- Individual and market demand can also be represented graphically
Market demand for children's swimwear in July is the combination of boys and girls demand
Diagram Analysis
- A shop sells both boys and girls swimwear
- In July, at a price of $10, the demand for boys swimwear is 500 units and girls is 400 units
- At a price of $10, the shops market demand during July is 900 units