Should Governments Try to Influence Population Growth
2. THEORY OF DEMAND AND SUPPLY:
THEORY OF DEMAND:
Demand refers to the quantity of a product that consumers are willing and able to buy at a particular price and over a given period of time. The law of demand states that more is bought at a lower price than at a higher price. In other words, the law of demand postulates an inverse relationship between the price and quantity demanded of a commodity, all other factors affecting demand remain constant (ceteris paribus). A market demand curve for a certain product is derived from the horizontal summation of all individuals demand curves at each and every price of the quantity demanded.
Price ($) Consumer A + Consumer B + Consumer C = market demand 1 20 30 40 90 2 18 26 35 79 3 15 18 22 55 4 11 12 19 42 5 7 10 12 29 Thus, by plotting price against quantity demanded from the market schedule, a downward sloping demand curve from left to right for the entire market is drawn.
Price D
P
P1
D
0 Quantity demanded Q Q1
A fall in the price from OP to OP1 expands the quantity demanded from OQ to OQ1, whilst a rise will do the contrary.
FACTORS INFLUENCING DEMAND (DETERMINANTS):
There are indeed several factors which affect the quantity demanded for a certain product.
1. Change in the price of the commodity itself: Changes in the price of the commodity will lead to changes in quantity demanded. For instance, a rise in the price of good X will lead to a fall in quantity demanded for good X. This is because good X is now more expensive and consumers buy less. 2. Change in real income: A change in real income means that there is a change in the quantity of goods and services money income can buy.
THEORY OF DEMAND:
Demand refers to the quantity of a product that consumers are willing and able to buy at a particular price and over a given period of time. The law of demand states that more is bought at a lower price than at a higher price. In other words, the law of demand postulates an inverse relationship between the price and quantity demanded of a commodity, all other factors affecting demand remain constant (ceteris paribus). A market demand curve for a certain product is derived from the horizontal summation of all individuals demand curves at each and every price of the quantity demanded.
Price ($) Consumer A + Consumer B + Consumer C = market demand 1 20 30 40 90 2 18 26 35 79 3 15 18 22 55 4 11 12 19 42 5 7 10 12 29 Thus, by plotting price against quantity demanded from the market schedule, a downward sloping demand curve from left to right for the entire market is drawn.
Price D
P
P1
D
0 Quantity demanded Q Q1
A fall in the price from OP to OP1 expands the quantity demanded from OQ to OQ1, whilst a rise will do the contrary.
FACTORS INFLUENCING DEMAND (DETERMINANTS):
There are indeed several factors which affect the quantity demanded for a certain product.
1. Change in the price of the commodity itself: Changes in the price of the commodity will lead to changes in quantity demanded. For instance, a rise in the price of good X will lead to a fall in quantity demanded for good X. This is because good X is now more expensive and consumers buy less. 2. Change in real income: A change in real income means that there is a change in the quantity of goods and services money income can buy.