Demand Curve Essay, Research Paper
Demand is “the quantity of a commodity that will be required at any given price over some given period of time”. “For the majority of the goods and services, experience shows that the quantity demanded will increase as the price falls.” (Stanlake 155) This characteristic can be shown by a demand curve. A demand curve is a graphical representation of the data in table with values of demand called a demand schedule. A good that is in greater demand do to income increases is known as a normal good. A inferior good is a good that is in less demand even though the income increases. When this situation occurs the demand curve is positive sloping. A giffen good is a special type of inferior good where demand increases when price increases. The graph below is a sample demand curve, where the demand schedule for the quantity of toilet paper demanded is graphed.
From this graph we can determine how many rolls of toilet paper will be purchased at what price. As can be seen from looking at this graph, it is negatively sloping. As one variable gets larger the other will become smaller, or when the price drops more is purchased. The whole demand curve “theory” is based on human behavior. It is logical to say that people will purchase more of a product when the price is cheaper.
In reality, if the price of a good rises the income (or assets) of the consumer will decrease. The people would not be able to buy the same goods as before because they cost more. Consumers can do two things; if the good is a normal good (previously defined), they would buy less of the good; if the good is an inferior good, they would buy more of the good. Thus, the income effect can be defined in this statement: When the price of a good falls, the expected outcome would be that the consumers would buy more because they have the money and can afford to buy more.
The slope of the demand curve can be explained in terms of the income and substitution effects.
If the price of a good falls consumers would buy more of that good and less of others. If the price of a good rises people would buy less of that good and more of another because the good is more expensive than others. The outcome of these would be a switching of purchases towards the cheaper product. When there is another similar good that is in price competition with an existing good, it is known as the substitution effect. Most demand curves slope downwards from left to right and therefore obey the general law that more goods would be demanded at lower prices. However there are certain demand curves that do just the opposite and slope in the other direction, which will be explained later.
For a normal good the substitution and income effects both go in the same directions. A rise in the price reduces in the quantity demanded because the price has risen. For a inferior good, the substitution effect and income effect go in opposite directions. Although, the substitution effect is stronger than the income effect because with a inferior good, when the price rises it leads to a fall in demand. When a good changes in price, the quantity demanded will be changed by the sum of the substitution effect and the income effect.
There are, however, cases that do not follow this path of the demand curve. From what had been previously explained, there have only been demand curves with a downward slope. This is not the case with all demand curves. There are a few cases that do the opposite and have an upward slope. An example of this graph is shown below.
The most important example of this exception in demand curves is provided by the demands for food such as bread, rice, corn, and potatoes in countries with very low living standards. Most of the families income would go towards food. In conditions like these, an increase in the price of a food could lead to an increase in the quantity demanded. If the families income remains the same then people with have to buy the same amount of food products for their family to survive. They would have to sacrifice money from being spent on other items. The amount of money remaining for the purchase of items other than food would be very small. Consumers may consider using the remaining income to buy more necessary foods because of the better value.
A second example of exceptional demand curves are presented by goods which have a elitist appeal. Some wealthy people buy things because they are expensive. Goods bought for pretentious reasons, a fall in price may cause them to loose it’s appeal and the quantity demanded might fall. In this case, these goods would not be a very effective way of showing off ones wealth.
Другие работы по теме:
Law Of Demand Essay Research Paper There
Law Of Demand Essay, Research Paper There are many different products that are in demand for teenagers today. Normally at different times there are different products that are high
Fossil Fuels Our Society
’s Dependency Essay, Research Paper Fossil Fuels: Our Society’s Dependency Natural Resources Report by Sean Falconer Chemistry 122 Mr. Hart 1997-02-07
Great Depression Essay Research Paper Explain the
Great Depression Essay, Research Paper Explain the underlying and immediate causes of the Great Depression. The causes of the Great Depression are all important and mostly interrelated. The distribution of wealth was far outbalanced as much more money was acquired by the rich. Oversupply and the inability of consumers to buy products caused several more problems.
BioTechnology Essay Research Paper The shortterm future
Bio-Technology Essay, Research Paper The short-term future of biotechnology in production agriculture looks bleak. The unattractive truth is that economics, not science can play a larger role in the future of biotechnology.
Demand And Supply Essay Research Paper Every
Demand And Supply Essay, Research Paper Every organisation which provides goods or services to fee paying customers must, by its very nature, charge price for that good or service, to
Econpric Essay Research Paper Economics Essay
Econpric Essay, Research Paper Economics Essay> Q. Why do prices of some goods fluctuate more than others?A. It is a well known fact, that various prices of goodsfluctuate at various levels. The products which fluctuate most inprice are often held to be necessities, but what is that makesthese changes, and which factors influence them.
Anaylsis Paper Essay Research Paper Analysis Paper
Anaylsis Paper Essay, Research Paper Analysis Paper 1 The EIA predicted Midwestern Illinois families to be spending as much as 40% more on heating this year compared to last year because of higher natural gas prices. The increase in price is largely due to the reduction of natural gas supplied.
Cayley
’s Sextic Essay, Research Paper The curve, Cayley?s Sextic can be described by the Cartesian equation: 4(x^2 + y^2 ? ax)^3 = 27a^2(x^2 + y^2)^2. It is the involute of a nephroiod curve because of its slight kidney shape and because they are parallel curves. This curve was first discovered by a mathematician by the name of Colin Maclaurin.
Ripple Effects Upon Economy Essay Research Paper
There are several things that can cause a ripple effect in our economy. There are economic facts, or things that will happen no matter what, that start to affect more and more people, until they sooner or later effect everybody. The
SupplyDemand And The Theories Of Location Essay
, Research Paper Economic theories of supply and demand provide a clear indication of the effectiveness of free markets in the allocation of land resources. Changes in the costs associated with accessibility have resulted in a free market move of population away from traditional city centres.
Summary Of Pure Competition Essay Research Paper
There are four major types of markets. They are: Pure Competition: Large number of buyers and sellers trading a standardized product (corn, wheat); Pure Monopoly: One seller, firm is the industry; Monopolistic Competition: Large number of buyers, large number of sellers each selling a similar but slightly differentiated product (cigarettes); Oligopoly: Very few sellers that acknowledge that decision of one firm affects the others and takes this fact into account when making production or pricing decisions.
Untitled Essay Research Paper Jennifer Loughery
Untitled Essay, Research Paper Jennifer Loughery Back in the middle of October, the price of natural-gas had risen because a gas company was forced to shut down a pipeline due to the need for repairs. This
The Internet Market In Kuwait Essay Research
Paper Many competitive markets have been appeared in Middle East lately, and specially in Kuwait. The One which I will discuss is the Internet competitive market in Kuwait . Internet has been a great demand in all over the world. In 1992, The ministry of communication in Kuwait provided the internet service.
Explain What Is Meant By The Term
An Economic Model Essay, Research Paper Explain what is meant by the term an economic model and outline a model of price and output determination in a free market. Examine the effect of a change in real disposable income on equilibrium price and output.
Economic Statistics Essay Research Paper 1 Traffic
Economic Statistics Essay, Research Paper 1. Traffic Congestion If a city council faces severe problems with traffic congestion, a knowledge will benefit all parties. It is this I will debate in the lines to come. When traffic is a problem in a city, all sorts of means of transportation can be included, but it is mainly cars which seem to be the problem.
Define And Explain The Concepts Of Price
, Income And Essay, Research Paper Price elasticity of demand is defined as how demand changes as a result of a change in price. It can be said that if a reduction in price leads to an increase in demand then demand is relatively elastic. Elasticity
Econ3of6 Essay Research Paper Economics
Econ3of6 Essay, Research Paper Economics – Traffic Congestion city problems traffic street transportation Gondomar and Bayona National Income1.Traffic Conjestion If a city council faces severe problems with trafficcongestion, a knowledge will benefit all parties. It is this I willdebate in the lines to come.
What Is Economics Essay Research Paper Many
What Is Economics? Essay, Research Paper Many people think that economics is about money. Well, to some extent this true. Economics has a lot to do with money: with how much money people are paid; how much they spend: what it costs to buy various items; how much money firms earn; how much money there is in total in the economy.
Unemployment Essay Research Paper The term unemployment
Unemployment Essay, Research Paper The term unemployment means to be without a job but actively looking for one. Throughout the years the unemployment rate has fluctuated, this was caused by the changes in aggregate demand for the final product. There are three types of unemployment, frictional, structural, and deficient demand.
How Are Automatic Stabilizers Used To Combat
Inflation Essay, Research Paper How are Automatic Stabilizers Used to Combat Inflation? In today?s economy, there are devices present called automatic stabilizers. Automatic stabilizers, are mechanisms which aid in the correction of an economic problem without the interference of anyone or anything.
Managing Classroom Behavior Essay Research Paper MANAGING
Managing Classroom Behavior Essay, Research Paper MANAGING CLASSROOM BEHAVIOR REPORT #1 Managing classroom behavior can be a difficult task, especially if you have a child who is always causing disturbances. Once you have identified that there is a problem, you should ask yourself six simple questions.
Buddhist Economics Essay Research Paper Buddhist EconomicsMost
Buddhist Economics Essay, Research Paper Buddhist Economics Most people think that religion and economics don?t mix. So you would think the same in the case with Buddhism and economics. But actually the there is a set of rules that go along with our modern day economics that have their own meanings. Buddhists believe that spiritual health and well being go hand in hand.
Death On Demand Reaction Paper Essay Research
Paper Death on Demand Reaction Paper Death on Demand was quit interesting. Throughout the novel several economic concepts were cleared up therefore, helping me to better understand them. But also, at the same time I was further confused about several others. I was especially intrigued by the following four concepts, and the characters in the novel helped my understanding of them grow.
Economic Report Essay Research Paper Demand In
Economic Report Essay, Research Paper Demand In economics, we need to use terms a little more carefully than they are sometimes used in ordinary discussions. In general use, “Demand” is a word that can have more than one meaning, but in microeconomics we define it more carefully so that it has only one meaning.
OPEC
– Supply And Demand Essay, Research Paper Lora Tomasello 7 / 17 / 00 Essay 1 The supply and demand issues dealing with the OPEC are that we are in great need of gasoline in the United States, since gas prices have soared in the past year. Saudi Arabia has a vast supply of stored oil. However, in the article it states that the Saudis cannot afford to appear as America?s lackeys.
Do Higher Wages Cause Higher Prices Or
Do Price Rises Cause Wage Rises? Essay, Research Paper Do higher wages cause higher prices, or do price rises cause wage rises?? What are the policy implications in either case?Inflation involves
Heilbroner
’s Worldly Philosphers Essay, Research Paper 1. People looking to trade in their old car for money off of their new car become discouraged with the low trade in value, and decide either not to buy a new car at all or to buy a cheaper model. The lower car sales is a reduction in demand, because the decrease in resale value of used cars is not changing the prices of the new cars, as a change in quantity demanded would suggest, it is changing what people are willing to pay for the cars.
Show Carefully How A Market Demand Curve
Can Be Derived From Individuals? Indifference Maps And Budg Essay, Research Paper I will split the answer to this question into four distinct parts. Firstly I will show how indifference curves and budget constraints can
Econ Essay Research Paper Moneycommodity money Fiat
Econ Essay, Research Paper Money-commodity money, Fiat. Money supply=currency in hands of public+other assetsas means of payment (demand deposits, traverler’s checks, savings accounts, time deposits, mutual funds)
Supply And Demand Essay Research Paper Market
Supply And Demand Essay, Research Paper Market demand is best defined as each consumer s demand for a particular product, or each firm s demand for a particular factor. The law of demand specifies that the amount demanded varies inversely with price . The following diagram can best demonstrate this. The table shows the maximum rate of purchase.
Law Of Demand No Way To Be
Proven Wrong Essay, Research Paper Law of Demand is an assertion. We need not question it if its testable implications have not yet been refuted. But quite a lot of people always challenge such a law and doubt its predictive power.