Law of Demand
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WHAT IS TO BE PRODUCED? Law of Demand
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Law of Demand. What is to be produced?. Law of Demand. Demand = “Willingness & Ability” 5 P 6 Qd Conversely, 6 P 5 Qd; We therefore state that r P = r Qd “ceteris paribus” – all things remaining constant. In other words, with no other factors to consider. Law of Demand. - PowerPoint PPT Presentation
Transcript of Law of Demand
WHAT IS TO BE PRODUCED?
Law of Demand
Law of Demand
Demand = “Willingness & Ability”
5P 6Qd Conversely, 6 P 5Qd; We therefore state that rP = rQd
“ceteris paribus” – all things remaining constant. In other words, with no other factors to consider.
Law of Demand
Demand Schedule
Scenario P (Price)Qd (Quantity Demanded)
A $2.00 60000
B $4.00 40000
C $6.00 30000
D $8.00 25000
E $10.00 23000
Law of DemandDemand Chart
20000 30000 40000 50000 60000 70000$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
Quantity DemandedScenario P (Price)
Qd (Quantity Demanded)
A $2.00 60000
B $4.00 40000
C $6.00 30000
D $8.00 25000
E $10.00 23000
Law of Demand
20000 25000 30000 35000 40000 45000 50000 55000 60000 65000$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00Quantity Demanded
Law of Demand
Other factors that result in rQd:Normal goods vs Inferior Goods
Changes in (i) income or personal preferences
