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Demand
Demand Schedule and Demand Curve
The demand for a product is defined as the quantity that buyers are willing to buy.
The demand schedule show the quantity of the product demanded by a consumer or an
aggregate of consumers at any given price.
From our daily experience of buying and selling, we know that higher prices influence
people to buy less. Therefore, the demand function shows how the quantity demanded of
a particular good responds to price change.
The demand schedule must specify the time period during which the quantities will be
bought (Table 4)
Table 4
Hypothetical Market Demand
Schedule for Good X per week
Figure 15
Hypothetical Market Demand Curve for One Week
The normal demand curve slopes downward from left to right. Any point on the demand
curve reflects the quantity that will be bought at the given price.
Supply
The concept of supply shows the seller’s side of the market.
The supply curve contains the exact prices and in the supply schedule. In effect, it is the
graphical representation of the supply schedule.
The supply curve is upward sloping from the left to right. It shows a direct relationship
between price and quantity supplied. Any point on the supply curve reflects the quantity
that will be supplied at that given price.
After analyzing the above relationship we can now state that as price increases, the
quantity supplied of a product tends to increase and as price decreases, quantity supplied
instead decreases.
Market Equilibrium
Demand and supply should eventually be analyzed as one since the market operates
within the forces of both demand and supply.
Combining the demand and supply curves will show the point of market equilibrium.
This equilibrium is attained at point where demand is equal to supply.
There is only one point in the graph where demand is exactly equal to supply. This point
of equality is called the equilibrium point.
Figure 20
Hypothetical Marked Demand and Supply Curves for One week