Price System, Demand – Meaning, Schedules, Curves, Laws - SS1 Economics Lesson Note
The price system is a system that determines the distribution of goods and services. Demand refers to the quantity of goods and services that consumers are willing and able to buy at a particular price and time period.
Demand Schedules and Curves:
A demand schedule is a table that shows the quantity of a good or service that consumers are willing and able to buy at different prices. Whereas, the demand curve is a graphical representation of the demand schedule, showing the relationship between the price of a good or service and the quantity demanded.
Table 1: Demand Schedule for Eggs
|
Price (naira per dozen) |
Quantity demanded per week (Thousands)
|
100 |
50
90
100
80
150
70
200
60
250
50
300
40
350
30
400
20
450
10
500
If we plot all the price and quantity demanded points of the demand schedule on a graph on the assumption that demand can be plotted for all prices of eggs, we can obtain the demand curve for eggs per week. We measure price on the vertical axis and quantity demanded on the horizontal axis, such that:
Law of Demand:
The law of demand states that as the price of a good or service increases, the quantity demanded of that good or service will decrease, ceteris paribus (all other things being equal). This is because as the price of a good or service increases, consumers tend to substitute cheaper alternatives or reduce their consumption altogether. Conversely, as the price of a good or service decreases, the quantity demanded of that good or service will increase, ceteris paribus.