## Introducing Supply and Demand

Read the sections on Demand, Supply, Market Equilibrium, and Government Intervention and Disequilibrium for a mathematical exposition of the demand and supply model, clicking through to the next when you have finished each page. The chapter also covers price ceilings and price floor analysis as well as quantity regulations.

### Market Demand

Market demand is the summation of the individual quantities that consumers are willing to purchase at a given price.

#### LEARNING OBJECTIVES

Examine the relationship between market demand and individual demand

#### KEY TAKEAWAYS

##### Key Points
• The graphical representation of a market demand schedule is called the market demand curve.
• Following the law of demand, the demand curve is almost always represented as downward-sloping. This means that as price decreases, consumers will buy more of the good.
• Two different hypothetical types of goods with upward-sloping demand curves are Giffen goods and Veblen goods.
##### Key Terms
• Market demand: The summation of the individual quantities that consumers are willing to purchase at a given price.

The demand schedule represents the amount of some good that a buyer is willing and able to purchase at various prices. The relationship between price and quantity demanded reflected in this schedule assumes the following factors remain constant:

• Income levels;
• Population;Tastes and preferences;
• Price of substitute goods; and
• Price of complementary goods

The demand schedule is depicted graphically as the demand curve. The demand curve is shaped by the law of demand. In general, this means that the demand curve is downward-sloping, which means that as the price of a good decreases, consumers will buy more of that good.

Demand Curve: The demand curve is the graphical depiction of the demand schedule. For most goods and services, the demand curve exhibits a negative relationship between price and quantity and is as a result downward sloping.

A market demand schedule is a table that lists the quantity of a good all consumers in a market will buy at every different price. A market demand schedule for a product indicates that there is an inverse relationship between price and quantity demanded. The graphical representation of a market demand schedule is called the market demand curve.

Market Demand Schedule: A market demand schedule is a table that lists the quantity of a good all consumers in a market will buy at every different price.

The determinants of demand are:

• Income
• Tastes and preferences
• Prices of related (AKA complimentary) goods and services
• Prices of substitutes
• Number of potential consumers

The market demand is the summation of the individual quantities that consumers are willing to purchase at a given price.

As noted, both individual demand curves and market demand are typically expressed as downward shaping curves. However, special cases exist where the preference for the good or service may be perverse. Two different hypothetical types of goods with upward-sloping demand curves are Giffen goods (an inferior but staple good) and Veblen goods (goods characterized as being more desirable the higher the price; luxury or status items).