Bpp learning Media is an acca approved Content Provider

 
91 
 
4
The demand schedule 
The position of the 
demand curve 
is determined by the demand conditions, which include consumers' 
tastes and preferences, and consumers' incomes.
4.1 The concept of demand 
Demand 
for a good or service is the quantity of that good or service that potential purchasers would be 
willing and able to buy, or attempt to buy, at any possible price. 
Demand might be satisfied, and so actual quantities bought would equal demand. On the other hand, 
some demand might be unsatisfied, with the number of would-be purchasers trying to buy a good being 
too great for the supply of that good. In which case, demand is said to exceed supply. 
The phrase 'willing and able to buy' in the key term above is important. Demand does not mean the 
quantity that potential purchasers wish they could buy. For example, a million households might wish 
that they owned a luxury yacht, but there might only be actual attempts to buy 100 luxury yachts at a 
given price. 
Economic demand needs to be effective
. That is, it must be supported by available money 
(ie willing and able to buy), rather than just being a general desire for goods or services. 
4.2 The demand schedule and the demand curve
The relationship between demand and price can be shown graphically as a 
demand curve
. The demand 
curve of a single consumer or household is derived by estimating how much of the good the consumer or 
household would demand at various hypothetical market prices. Suppose that the following 
demand 
schedule
 
shows demand for biscuits by one household over a period of one month. 
Price per kg 
Quantity demanded 
$ kg 
1 9.75 
2 8 
3 6.25 
4 4.5 
5 2.75 
6 1 
Notice that we show demand falling as price increases. This is what normally happens with most goods. 
This is because purchasers have a limited amount of money to spend and must choose between goods 
that compete for their attention. When the price of one good rises, it is likely that other goods will seem 
relatively more attractive and so demand will switch away from the more expensive good to the cheaper 
alternative. So the shape of the demand curve is determined by the consumer acting 
rationally
; with 
demand tending to be higher at a low price, and lower at a high price for most goods and services. 
We can show this schedule graphically, with