by Demand Schedule is a tabular representation that shows the quantity of a good or service that consumers are willing to purchase at various price levels, over a specified period of time. It illustrates the relationship between price and quantity demanded, typically reflecting the law of demand, where the quantity demanded decreases as the price increases, and vice versa. A demand schedule can be presented in a table form, listing different prices alongside their corresponding quantities demanded. This schedule helps businesses and economists understand consumer behavior and predict how changes in price might influence demand.
Types of Demand Schedule:
1. Individual Demand Schedule
An individual demand schedule shows the quantity of a good or service that a single consumer is willing and able to buy at different prices during a specific period. This schedule helps understand the purchasing behavior of an individual consumer in response to price changes. For example, if the price of a particular good decreases, the individual may choose to buy more, which is reflected in their demand schedule.
2. Market Demand Schedule
A market demand schedule aggregates the individual demand schedules of all consumers in a particular market. It shows the total quantity of a good or service demanded by all consumers at various price levels. The market demand schedule helps businesses and policymakers understand the overall demand for a product in the entire market. It is derived by summing the quantities demanded by individual consumers at each price point.
Demand Schedule formula:
Demand schedule formula itself is not a single equation but rather a relationship that shows the quantity demanded at various price levels.
Qd = f(P)
Where:
- Qd = Quantity demanded
- P = Price of the good or service
- f(P) = A function that represents how demand changes in response to price
To derive the demand schedule, you would typically use the demand function for different values of P (price) and calculate the corresponding Qd (quantity demanded).
For example, in a simple linear demand function:
Qd = a – bP
Where:
- a = Intercept (the quantity demanded when price is zero)
- b = Slope (change in demand with respect to price)
- P = Price
