Question

Give an example of a demand schedule.

Short answer

An example of a demand schedule can be the following: Price (in USD per kg) - 10, 8, 6, 4, 2; Quantity demanded (in kgs) - 10, 20, 30, 40, 50. According to this schedule, as the price per kg of apples decreases, the quantity demanded by customers increases, manifesting the law of demand.

Step-by-step solution

Understanding the Concept of Demand Schedule

A demand schedule in economics is a table that lists the quantity of a good that consumers are willing to purchase at various prices. It follows the law of demand; as the price decreases, the quantity demanded increases, and vice versa.

Create Demand Schedule Table

Create a two-column table, one for price and one for quantity. The price starts from high and decreases, while quantity starts from low and increases.

Fill the Table with Data

Write a sequence of decreasing prices in the price column and correspondingly increasing quantities in the quantity column. For example, for a commodity like apples:\n\nPrice (in USD per kg) | Quantity demanded (in kgs)\n--- | ---\n10 | 10\n8 | 20\n6 | 30\n4 | 40\n2 | 50

Key concepts

Understanding the Law of Demand

The Law of Demand is a fundamental principle in economics stating that there is an inverse relationship between the price of a good and the quantity demanded. In simpler terms, as the price of a good decreases, consumers are more likely to purchase more of it.
This concept highlights consumer behavior, which reflects the tendency to buy more of a product when it is cheaper, and less when it becomes more expensive.
Understanding this concept is crucial for both businesses and consumers, since it guides key decisions about pricing and purchasing.

• The law applies to most consumer goods and services.
• External factors, such as consumer preferences and income changes, can influence this relationship.

For example, if a popular smartphone's price drops, demand often increases as consumers seize the opportunity to buy the device at a lower cost.

Exploring Quantity Demanded

Quantity demanded refers to the specific amount of a good that consumers are willing and able to purchase at a specific price level. It is an essential element in understanding market dynamics.
While the law of demand covers the core relationship, quantity demanded quantifies this by providing an actual number that reflects consumer choices at particular price points.
This concept helps in visualizing the demand schedule by matching price levels with consumer demand.

• It changes as price shifts due to various market influences.
• Multiple factors like consumer income, taste, and market trends can affect quantity demanded.

Thus, when analyzing demand, keep in mind that quantity demanded will adjust accordingly with changes in price and these influencing factors.

Deciphering Price and Quantity Relationship

The price and quantity relationship is central to understanding market mechanics. It typically sets the groundwork for how products and services are traded in an economy.
This relationship is illustrated by the demand curve, which graphically represents the demand schedule. It normally slopes downwards, capturing the essence of the law of demand—with prices on one axis and quantity demanded on the other.
These price changes guide both consumers and producers in making informed economic decisions.

• A lower price typically yields a higher quantity demanded.
• This relationship is vital in setting and adjusting market equilibrium where supply meets demand.

The price and quantity relationship ultimately helps in predicting how changes in the market might affect the demand for goods and services, assisting in planning and strategy formulation for economic stakeholders.