Chapter 3: Problem 20

What is the difference between the demand and the quantity demanded of a product, say milk? Explain in words and show the difference on a graph with a demand curve for milk.

Short Answer

Expert verified

The difference between demand and quantity demanded lies in their scope and focus. Demand refers to the overall desire, willingness, and ability of consumers to purchase a specific good or service at different possible prices during a specific time frame, while quantity demanded refers to the specific amount of that good or service that consumers are ready to buy at a particular price level. In a graph with a demand curve for milk, a change in price would result in movement along the curve, reflecting a change in quantity demanded, whereas a shift in the entire demand curve represents a change in demand due to other factors such as income, consumer tastes, or the price of related goods.

Step by step solution

Define Demand and Quantity Demanded

Demand, in economic terms, refers to the overall desire, willingness, and ability of consumers to purchase a specific good or service at different possible prices during a specific time frame. In contrast, the Quantity Demanded refers to the particular amount of that specific good or service that consumers are ready and capable to buy at a particular price level.

Explain the Difference

While both terms are related, they describe different economic phenomena. Demand is a more comprehensive concept that describes the entire range of quantities that consumers are willing to buy at varying price levels. Quantity Demanded, on the other hand, refers to one specific point on the demand curve – the quantity that consumers are willing to buy at a specific price.

Illustrate Using a Graph

Begin by drawing a downward sloping line on a graph. Label the y-axis as 'Price' and the x-axis as 'Quantity'. This line represents the demand curve for milk, indicating that as the price of milk decreases, the quantity demanded increases, and vice versa.

Depict Quantity Demanded

To represent quantity demanded, choose a specific price on the y-axis and draw a horizontal line to the demand curve. The point where it intersects the demand curve represents the quantity demanded at that particular price.

Explain Price Change and Quantity Demanded

If the price of milk changes, it will result in a movement along the demand curve, reflecting a change in the quantity demanded. For example, if price decreases, there will be a movement to the right along the demand curve, showing an increase in quantity demanded.

Explain Shift in Demand

If other variables (e.g., income, consumer tastes, price of related goods) change, this can shift the entire demand curve. For example, if milk becomes more popular (a change in consumer tastes), the demand curve would shift to the right. This means that at every given price level, the quantity demanded is now greater than before. In essence, this represents a change in 'demand' rather than 'quantity demanded'.

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