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The gradual reduction in the value of an asset (or a debt) over time. A debt (such as a mortgage) is amortised via regular repayments. Companies use amortisation to steadily...
- Overview
- Key points
- Demand for goods and services
- Demand schedule and demand curve
- The difference between demand and quantity demanded
If the price of something goes up, people are going to buy less of it.
•The law of demand states that a higher price leads to a lower quantity demanded and that a lower price leads to a higher quantity demanded.
•Demand curves and demand schedules are tools used to summarize the relationship between quantity demanded and price.
Economists use the term demand to refer to the amount of some good or service consumers are willing and able to purchase at each price. Demand is based on needs and wants—a consumer may be able to differentiate between a need and a want, but from an economist’s perspective they are the same thing. Demand is also based on ability to pay. If you cannot pay, you have no effective demand.
What a buyer pays for a unit of the specific good or service is called price. The total number of units purchased at that price is called the quantity demanded. An increase in the price of a good or service almost always decreases the quantity demanded of that good or service. Conversely, a decrease in price will increase the quantity demanded.
•A demand schedule is a table that shows the quantity demanded at each price.
•A demand curve is a graph that shows the quantity demanded at each price. Sometimes the demand curve is also called a demand schedule because it is a graphical representation of the demand scheduls.
Here's an example of a demand schedule from the market for gasoline.
Price, in this case, is measured in dollars per gallon of gasoline. The quantity demanded is measured in millions of gallons over some time period—for example, per day or per year—and over some geographic area—like a state or a country.
Here's the same information shown as a demand curve with quantity on the horizontal axis and the price per gallon on the vertical axis. Note that this is an exception to the normal rule in mathematics that the independent variable (x ) goes on the horizontal axis and the dependent variable (y ) goes on the vertical.
In economic terminology, demand is not the same as quantity demanded. When economists talk about demand, they mean the relationship between a range of prices and the quantities demanded at those prices, as illustrated by a demand curve or a demand schedule. When economists talk about quantity demanded, they mean only a certain point on the demand c...
Explain how economists test hypotheses, develop economic theories, and use models in their analyses. Explain how the all-other-things unchanged (ceteris paribus) problem and the fallacy of false cause affect the testing of economic hypotheses and how economists try to overcome these problems.
Jan 15, 2024 · Demand is an economic concept that relates to a consumer's desire to purchase goods and services and willingness to pay a specific price for them. An...
Economics (/ ˌ ɛ k ə ˈ n ɒ m ɪ k s, ˌ iː k ə-/) is a social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work.
Explain the concepts of scarcity and opportunity cost and how they relate to the definition of economics. Understand the three fundamental economic questions: What should be produced? How should goods and services be produced?
Apr 4, 2024 · Economics is a social science that focuses on the production, distribution, and consumption of goods and services. The study of economics is primarily concerned with...
