Question

2. Demand terminology 

Complete the following table by selecting the term that matches each definition. 

A graphical object showing the relationship between the price of a good and the amount of the good that buyers are willing and able to purchase at various prices 

A table showing the relationship between the price of a good and the amount that buyers are willing and able to purchase at various prices 

The claim that, with other things being equal, the quantity demanded of a good falls when the price of that good rises 

The amount of a good that buyers are willing and able to purchase at a given price 

Apply your understanding of the previous key terms by completing the following scenario with the appropriate terminology 

Your coworker Musashi is really concerned about a project that he has just been assigned. He is in charge of analyzing and determining conditions in the market for televisions from an extensive sales report. 

If Musashi's boss is interested in a graphical representation of the relationship between the price and quantity of televisions demanded, you would advise your coworker to construct _______  using the data provided. However, if Musashi's boss is more interested in the detailed numbers used to construct this visual representation, you would instead advise your coworker that  _______  would be more appropriate. 

Answer 1

Demand curve is the graphical object that shows the relationship between the price of a goods and the amount of the good that buyers are willing and able to purchase anytime.

The demand curve is shown on a graph with ‘price’ the independent variable on the y-axis and ‘quantity demanded’, the dependent variable on the x-axis. The demand curve is then plotted by joining all those points which reflect a single consumer’s preference for the quantity of a certain commodity against a given price , say, 10 units for $5 and 20 units for $2 and so on. A market demand curve is a graphical presentation of the quantities that all the consumers of a commodity buy at various prices.

Since the demand curve shows the relationship between the quantity demanded and price , its called a graphical object , with reference to the theory of demand.

The demand schedule is a table showing the price of a good and the amount that buyers are willing and able to purchase at given prices. Since a schedule shows information in a proper and clear manner—a demand schedule depicts how much of a commodity an individual will be willing and able to buy at a given prices. It will have columns with respect to price of the commodity (given in $) and quantity demanded ( or purchased ) by the individual consumer (measured with respect to units of the commodity , say , cloth in meters , and so on ).

The demand schedule contains the data about the prices of the commodity in question and the quantities that the consumers demand at those different prices. Since the data are tabulated in a clear and concise manner , it is called a demand schedule.

Law of demand states that there is a relationship between the quantity of a commodity that a consumer is willing and able to buy and its price , such that when the prices are high there is a tendency to reduce the amount of commodity that the consumer would want to buy and when the prices are really low !!! the consumer would want to buy more units of the commodity – this inverse relation ship between the quantity demanded of a commodity and its price has been stated in ‘law of demand’.

The law however assumes that all factors that affect the buyer's preference to purchase the commodity cannot be kept variable at the same time, so it says that varying price and quantity demanded ( which are two important factors) the other aspects like income of the consumer, his preference for the commodity and so on are kept constant (other things being equal) and thus the relationship between price and quantity is studied.

The amount of a good that consumers are willing and able to purchase at a given price is called quantity demanded, since the word demand would mean not just a ‘need’ for using the commodity or dreaming of gaining satisfaction from it but means a ‘need to possess the commodity which is well supported by the money required to buy it. This ( possessing the power to buy it ) converts ta mere need to possess the commodity into ‘demand’ for the commodity.

Hence the quantity demanded shows how much a consumer is willing to buy at a given price. Of course we assume that the factors like the preference for buying the commodity, the prices of substitutes goods that can be used in place of the commodity in question and so on are kept constant.

Since the need for a good –called demand is influenced primarily by its price , we study the relationship between these two variables.

……..you would advise your co-worker to construct a demand curve using the data provided.

( It’s a demand curve since Musashi’s boss is interested in graphical presentation of the price and quantity demanded of the commodity in question which is ‘television’. A demand curve is a graphic expression of a given set of data.

…….you would advise your co worker that a demand schedule would be more appropriate.

(it’s a demand schedule since, if Musashi’s boss is more interested in the numerical information—the market response for televisions—the quantity demanded by various consumers at different prices of the product in question –the television , the a schedule will be more appropriate in meeting the requirement of Musashi;s boss.