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Chapter 3: Problem 1

What is a demand schedule? What is a demand curve?

Short Answer

Expert verified
A demand schedule is a table showing how much of a good or service consumers will buy at different prices. The demand curve is a graph of the demand schedule, showing the inverse relationship between price and quantity demanded.

Step by step solution

01

Definition of Demand Schedule

A demand schedule is a table that shows the quantity of a good or service that consumers will purchase at various prices. It helps to understand the consumer behavior in terms of quantity demanded at different price levels.
02

Definition of Demand Curve

A demand curve is a graphical representation of a demand schedule. It plots the price of a product on the vertical axis and the quantity demanded on the horizontal axis. Generally, the demand curve slopes downwards from left to right, indicating an inverse relationship between price and quantity demanded.

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Most popular questions from this chapter

Related to the Apply the Concept on page 81\(]\) An article on marketwatch.com stated, "While the fizzy soda drinks companies have experienced an annual volume sales decline since \(2003,\) bottled water grew every year over the last two decades, except 2009 during the depths of the Great Recession." a. What factors have caused a decline in sales of carbonated ("fizzy") beverages? Is it likely that those factors will lead to further declines in demand in the future? Briefly explain. b. Why might sales of bottled water be likely to decline during a recession, when employment and household incomes fall? Would sales of premium bottled water be likely to decline by more or by less during a recession than sales of regular bottled water? Briefly explain.

[Related to Solved Problem 3.3 on page 88\(]\) In The Wealth of Nations, Adam Smith discussed what has come to be known as the "diamond and water paradox": Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it. Graph the market for diamonds and the market for water. Show how it is possible for the price of water to be much lower than the price of diamonds, even though the demand for water is much greater than the demand for diamonds.

Years ago, an apple producer argued that the United States should enact a tariff, or a tax, on imports of bananas. His reasoning was that "the enormous imports of cheap bananas into the United States tend to curtail the domestic consumption of fresh fruits produced in the United States." a. Was the apple producer assuming that apples and bananas are substitutes or complements? Briefly explain. b. If a tariff on bananas acts as an increase in the cost of supplying bananas in the United States, use two demand and supply graphs to show the effects of the apple producer's proposal. One graph should show the effect on the banana market in the United States, and the other graph should show the effect on the apple market in the United States. Be sure to label the change in equilibrium price and quantity in each market and any shifts in the demand and supply curves.

Historically, the production of many perishable foods, such as dairy products, was highly seasonal. As the supply of those products fluctuated, prices tended to fluctuate tremendously - typically by 25 to 50 percent or more - over the course of the year. One effect of mechanical refrigeration, which was commercialized on a large scale in the last decade of the nineteenth century, was that suppliers could store perishable foods from one season to the next. Economists have estimated that as a result of refrigerated storage, wholesale prices rose by roughly 10 percent during peak supply periods, while they fell by almost the same amount during the off season. Use a demand and supply graph for each season to illustrate how refrigeration affected the market for perishable food.

Consider the following two uses of the word demand in news articles: a. An article in the Wall Street Journal noted that an "increase in the price of oil quickly reduces demand for oil." b. A different article in the Wall Street Journal noted, "Electric cars are poised to reduce U.S. gasoline demand by \(5 \%\) over the next two decades." Do you agree with how these two articles use the word demand? Briefly explain.
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