SLOPE OF A DEMAND CURVE

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Learning Contents:

·         Slope of a Demand curve

·         Slope representation using Demand schedule and Demand curve

·         Types of  slope of a Demand curve

Slope of  a demand curve

The previous post explored the meaning of slope, how slope is calculated between any two points on a line. The slope of a demand curve can be found similarly to the slope of a line. This post would brief about the slope of a demand curve

The demand curve usually slopes downward from left to right shows an inverse relationship between the quantity demanded of a commodity and its price. The slope is defined as the change in the variable on the Y-axis divided by the change in the variable on X-axis. Usually, price is shown on Y-axis, and quantity demand is shown on X-axis which forms a straight line downward sloping demand curve. So, the slope of a demand curve is the ratio of change in the price to change in quantity demand of a commodity. In other words, it is calculated by dividing the change in price with the change in quantity demand.

Whereas,

 


Slope representation using demand schedule and demand curve

The slope of a demand curve can be clearly represented with the help of the demand schedule and the demand curve. The demand’s schedule and its curve showing an inverse relationship between price and quantity demand are shown below:

Table 1: Demand Schedule

Price

(₹)

Quantity Demand

(Units)

10

50

20

40

30

30

40

20

50

10


Figure 1: Demand Curve



 

 Slope of a Demand curve

As we can see above that the demand curve is a straight line sloping downward from left to right. The slope of a demand curve is calculated between any two points and remains constant throughout the demand curve. For example,

·                     At point B and C, slope is   

 

Q1 = 20              P1 = 40

Q2 = 30               P2 = 30

·                     At point A and D, slope is   

 

Q1 = 10              P1 = 50

Q2 = 40               P2 = 20


The above examples showing that the slope is constant i.e. -1 between point B and C and A and D. Therefore, the slope will be -1 between any two points chosen on the demand curve when the demand curve is a straight-line demand.

 

Types of Slope of Demand curve:

The slope of  a demand curve is classified into four different categories are explained below:

1.      Positive Slope

2.      Negative slope

3.      Zero Slope

4.      Undefined Slope

 

 1. Positive slope of a demand curve occurs when a positive relationship exists between price and quantity demand. It is called a positive slope as the demand curve is rising up. Usually, a positive slope of  a demand curve exists in cases of exceptions to the law of demand.



  2. Negative slope of a demand curve occurs when a negative relationship exists between price and quantity demand. It is called a negative slope as the demand curve is falling down. Generally, a downward sloping demand curve exists in the real world.



3. Zero slope of a demand curve is usually shown as a straight line parallel to X-axis indicating any price if set above the prevailing price i.e. P* would drop the demand to zero. The slope of a horizontal line is always zero.



4. Undefined slope of a demand curve is usually shown as a straight vertical line parallel to Y-axis indicating quantity demand would remain the same irrespective of change in price. The slope of a vertical line is undefined. Usually, this slope occurs in the case of necessary goods.






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