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By the end of this topic, you should be able to:
Demand is the willingness and ability of a consumer to buy a good or service at a given price, over a certain period of time.
Two things must exist at the same time for demand to count:
This is called effective demand — it separates genuine demand from a simple wish or desire.
💡 Example: You might want a brand-new sports car worth $200,000, but if you don't have the money to buy it, that is just a desire — not demand. Demand only exists when you both want it and can afford it.
A demand schedule is a table that shows how much of a good consumers are willing and able to buy at different prices.
Here is a simple example:
| Price ($) | Quantity Demanded (units) |
|---|---|
| 5 | 2 |
| 4 | 4 |
| 3 | 6 |
| 2 | 8 |
| 1 | 10 |
Notice the pattern: as the price goes up, the quantity demanded goes down. As the price goes down, the quantity demanded goes up. This is the key relationship in demand.
When you plot the demand schedule on a graph, you get a demand curve.
Price (P)
| \
| \
| \ ← D (Demand Curve)
| \
|______\___________
Quantity Demanded (QD)
The downward slope tells us that higher prices lead to lower quantities demanded, and lower prices lead to higher quantities demanded.
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