Question

What is the difference between the demand and the quantity demanded of a product, say milk? Explain in words and show the difference on a graph with a demand curve for milk.

Short answer

The difference between demand and quantity demanded lies in their scope and representation. Demand refers to the overall relationship between the price of a product, such as milk, and the quantity that consumers are willing and able to purchase. It can be thought of as the entire downward-sloping curve that reflects various quantity levels consumers are willing to buy at different price points. On the other hand, quantity demanded is a specific point on the demand curve, representing the exact amount a consumer is willing to buy at a particular price. In a graph, the demand curve represents the demand, while the intersection point between a horizontal line at a chosen price and the demand curve illustrates the quantity demanded at that specific price level.

Step-by-step solution

Define Demand and Quantity Demanded

Demand refers to the overall relationship between the price of a product and the quantity that consumers are willing and able to purchase. Quantity demanded, on the other hand, is the specific amount of a product that buyers are willing and able to purchase at a given price level. In simpler terms, the demand can be thought of as the whole curve, reflecting the diverse quantity levels consumers are prepared to buy at various price points. In contrast, the quantity demanded is a single point on that curve representing the specific amount a consumer is willing to buy at a particular price.

Explain the Determinants of Demand

There are several factors that affect the demand for aproduct. These factors include: 1. Price of the product: The higher the price, generally the lower the quantity demanded, and vice versa. This is the law of demand. 2. Income of the consumers: As income increases, consumers might be more inclined to buy a product, in case it is a normal good. 3. Price of substitutes and complements: If the price of a substitute good increases, the quantity demanded for the substitute good will fall, raising the demand for the original good. If the price of a complement good increases, the demand for the complement good and the original good would fall. 4. Consumer preferences and tastes: Demand for a product can shift due to changes in preferences and tastes of the consumers. 5. Expectations about future prices: If consumers expect prices to rise in the future, they might increase their current demand in anticipation.

Draw a Demand Curve for Milk

To visually represent the difference between demand and quantity demanded, we will draw the demand curve for milk. The demand curve is a downward-sloping curve, indicating that as the price of milk increases, the quantity demanded decreases, and as the price of milk decreases, the quantity demanded increases. To draw the demand curve on a graph: 1. Label the horizontal axis as "Quantity of Milk" and the vertical axis as "Price." 2. Plot a downward-sloping curve, representing the demand for milk. 3. Choose a specific price level on the vertical axis, and draw a horizontal line at that price. 4. Identify the intersection point between the horizontal line and the demand curve for milk. This is the specific quantity demanded of milk at the given price level.

Demonstrate the Difference on the Graph

Now that we have drawn the demand curve for milk, we can show the difference between demand and quantity demanded on the graph. 1. Identify the entire demand curve: The demand curve represents the overall relationship between the price of milk and the quantity that consumers are willing and able to purchase. 2. Highlight the specific quantity demanded at a given price: The intersection point between the horizontal line at the chosen price and the demand curve illustrates the quantity demanded at that specific price level. So, the key difference between demand and quantity demanded is that demand represents the whole curve (the relationship between price and the quantity that consumers are willing to buy), whereas quantity demanded is a single point on the curve, showing the specific quantity a consumer is willing to buy at a given price.