Demand Schedule and Demand Curve

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 Learning Contents:                                                            

·            Individual Vs. Market Demand Schedule

·            Individual Vs. Market Demand Curve

·            Difference between Individual and Market demand.


Demand Schedule

A table that shows the relationship between quantity demand and the price of a commodity is called as demand schedule. In other words, Demand Schedule is a table showing different quantities of a commodity that consumers purchase at different prices.

The demand schedule is generally based on the law of demand that says other things remain constant, there exists an inverse relationship between price and quantity demand. If the price increases, the quantity demand decreases whereas if the price decreases, quantity demanded increases.

The demand schedule generally consists of two columns: one for the price of a commodity and the other for the quantity demand.  The demand schedule is classified into two types:


Demand Curve

Demand curve is the graphical representation of the demand schedule that shows the relationship between price and quantity demand of the commodity. Demand curve is also classified into two types:


Individual Demand Schedule

It is a table that showing different quantities of a commodity that one consumer will buy at different possible prices of that commodity, at a point of time.

                             Individual Demand Schedule 

Price of

Apples

      (Amount in ₹)

Quantity

Demand

      (Units)

 

20

4

30

3

40

2

50

1

Explanation:

The above schedule depicts the individual demand schedule. We can see that when the price of the apples is ₹20, the consumer demands 4 units of apples. Similarly, when price rises to ₹50, his demand decreases to 1 unit of apple. It indicates the negative or inverse relationship between quantity demanded and the price of the apples.

Individual Demand Curve

Individual demand curve is the graphical representation of the individual demand schedule. It also shows the relationship between price and quantity demanded of a commodity by a consumer.



Explanation

The quantity demanded by a consumer is shown on X-axis and the price of apples is shown on Y-axis. DD curve shows an individual demand curve that indicates the quantity demand of apples at different prices. The individual demand curve slopes downward from left to right indicating an inverse relationship between price and quantity demanded of a commodity. We can see that, when the price of apples is ₹20 per unit, its demand is 4 units and when the price is ₹ 50 per unit, its demand is 1 unit.

Market Demand Schedule

It is a table showing different quantities of a commodity that all consumers will buy at different possible prices, at a point of time. It considers the purchase by all consumers in the market. We get the market demand of a commodity by doing the total quantity demanded by all the consumers at different prices.

To understand this concept, we assume that there are three consumers A, B, and C in the market. Their quantity demand at different prices is given in the market demand schedule.

Market Demand Schedule of Consumer ‘A’, ‘B’, ‘C’

 

Price of

Apples

    (amount in ₹)

 

Quantity demand

  ( units in kg)

 

Total Quantity demand

of Apples

(A+B+C)

A

   

 

B

    

 

C

    

 

20

4

5

6

15

30

3

4

5

12

40

2

3

4

9

50

1

2

3

6


Explanation:

The above schedule depicts the market demand schedule. We can see that when the price of the apples is ₹20, market demand is 15 units of apples.  Similarly, when the price rises to ₹50, market demand falls to 6 units of apples. It indicates the negative relationship between quantity demanded and price of the apples.

Market Demand Curve

Market demand curve is the graphical representation of the market demand schedule. It is also based on Law of Demand that indicates an inverse relationship between price and quantity demand. Higher the price, Lower will be the demand for a commodity and  Lower the price, Higher will be the demand for a commodity.  Further, Individual demand curves of  consumers 'A', 'B', and 'C' and  their market demand curve is shown as below:











Explanation

Figure 1,2, and 3 represents the individual demand curve of the consumer  A, B and C respectively.  Quantity demand is shown on X-axis, and the price of the apples is shown on Y-axis and In fig. 4, the DD curve shows the market demand curve that indicates the market demand of apples at different prices. Market demand curve also slopes downward from left to right indicating an inverse relationship between price and quantity demanded of a commodity. We can see that when the price of apples is ₹20 per unit, market demand for apples is 4+5+6 =15 units, and when the price is ₹50 per unit, market demand is 1+2+3 = 6 units.

Difference between Individual Demand and Market Demand


S.No.

Individual Demand

Market Demand

1.

Individual Demand is the demand of an individual or a single consumer.

Market demand is the demand of all the consumers in the market.

2.

Law of demand may or may not hold true because an individual consumer may or may not consider price factor while buying the commodities.

Law of demand holds true as the entire consumers would not ignore the price and other factors while buying the commodities.


Let’s try some questions

Choose the Correct Answer

1. ____________ is a table representing the quantity demanded by a consumer at different prices of a commodity.

a. Individual demand schedule

b. Market demand schedule

c. Both a. and b.

d. None of above

2. The graphical representation of a table showing price and demand relationship for a commodity in the market is called:

a. Individual demand curve

b. Producer’s demand curve

c. Market demand curve

d. Consumer’s demand curve

3. The market demand curve shows

a. the effect on market supply of a change in the demand for a good or service.

b. the quantity of a good that consumers would like to purchase at different prices.

c. the marginal cost of producing and selling different quantities of a good.

d. the effect of advertising expenditures on the market price of a good.

4. Which of the following is found by adding all the individual demand curves?

a. Producer’s Demand curve

b. Supplier’s Demand curve

c. Market Demand curve

d. None of above

5. Market Demand is a macroeconomic concept.

a. True

b. False

 

Answer Key

 

1.a

2.c

3.b

4.c

5.b

 

 

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