Running Head: ASSIGNMENT 3 1

The Difference Between Demand and Quantity Demanded

Kerrisha John

St. George’s University

Microeconomics

Mr. Lennox Andrews

September 23rd ,2020.

ASSIGNMENT 1 2

Demand

Demand is the relationship between the price of a product and the quantity demanded for

that product at that price. The demand curve slopes downwards from left to right. An individual

demand table is a table that shows the relation between the product prices and the quantity

demanded at each price. The quantity demanded is the amount of goods that buyers are willing

and able to purchase at a specific price. A change in quantity demanded occurs when there is a

change in price (Ceteris Paribus).

The law of demand states that there is an inverse relationship between price and quantity

demanded that applies to virtually everything sold – as price rise, the quantity demanded falls;

when price drop, the quantity demanded increases. There are two variable price and quantity

demanded. A change in quantity means there is a movement along the same demand curve.

Why is the demand for a product inversely related to price? for several reasons. As price

increases fewer people will be able to purchase the product, since some people will not have

enough money to purchase it at the new price. Furthermore, people buy products for their utility,

how much satisfaction they will receive by purchasing the product.

Factors that influence the demand of a commodity:

- Size of Family

- Taste and Preferences

- Price
ASSIGNMENT 1 3

Example below is showing the Demand Curve (Decrease)

Price Quantity
Demanded
Scenario: Payless is having a storewide sale on shoes. When the price was
$40 20
$20 40 high the demand was low, now that the price has decreased the demand for

shoes is high. How will the demand curve look?

Price D
P1 40 A

30

P2 20
D

10

0
10 20 30 40
Q1 Q2

Quantity Demanded

The graph above shows the relationship between price and quantity demanded and how the law

of demand comes into play. As we can see the price changed from P1 to P2 and from Q1 to Q2.

This occurred as a result of the changes in price of shoes. This change resulted in a movement

along the demand curve moving from point A to point B. The diagram above shows an inverse

relationship.
ASSIGNMENT 1 4

Example below is showing the Demand Curve (Increase)

Price Quantity Scenario: There has been a scarcity on the market for Soursop, Mr. Victor
Demanded
$10 20 a Farmer has 20 soursop he picked on the tree that evening. A soursop is
$20 10
priced at $10 a pound because of the high demand for soursop Mr. Victor

has decided to Increase the price from $10 to $20 a pound. How will the

demand curve look?

D
B
P2 20

15

10 A
P1

5 D

10 20 30 40
Q1 Q2 Quantity Demanded

The above diagram shows what happens when the price of a good is increased due to scarce

resources. When the demand for a good is high suppliers usually increase their prices so the

buyer who wants the good the most, will have to meet the supplier’s price. This will also lessen

on the buyers also, because only those who are able to pay for it will be demanding it at the new

price. E.g. How it is done in an Auction.

ASSIGNMENT 1 5

The Change in Demand

A typical demand curve is drawn relative to price Ceteris Paribus. Ceteris Paribus means

all other things remaining equal. These other things are the underlying conditions of demand and

if there is a change in any of the conditions of demand Ceteris Paribus is violated and the whole

demand curve shifts to a new position. The underlying conditions are: Income, Taste, Family

Size and Population size.

Price does not change when there is a shift in the demand curve, what changes is the

underlying conditions. If the demand curve is to the right of the original demand curve, then

there is an increase in demand. If the new demand curve is to the left of the original demand

curve, then there is a decrease in demand.

The reasons for the changes in the demand curve (increase or decrease)

- Income

- Compliments goods consumed together (Milk and Cereal)

- Substitute goods, similar goods (used in place of another good e.g. Crix and Bread)

- Taste and preferences

- Advertising and population change

ASSIGNMENT 1 6

Diagram showing the change in Demand (Increase and Decrease)

Price of
Coffee

P1 20

D3 D1 D2
0
Q3 Q1 Q2

Quantity Demanded

The above shows the change in the demand for coffee. The original demand curve was

D1 but there was an increase in the demand for coffee when they launched the new instant

coffee, but not just instant coffee, but a new and different taste and flavor of the coffee, smaller

packets, and new packaging. This brought about an outward shift (increase) in the demand curve,

creating a new demand curve D2. Suddenly there was a new product on the market which is

Ovaltine and all the people who used to be consuming Coffee has substituted the consumption of

coffee for Ovaltine since it was in the same price range as coffee but cheaper by a few cents.

This change brought about an inward shift (Decrease) in the demand curve, as represented in D3

on the diagram above.

ASSIGNMENT 1 7

References

Thanos Kim,Courses.lumenlearning.com
https://courses.lumenlearning.com/wmintrobusiness/chapter/video-change-in-demand-vs-
change-in-quantity-
demanded/#:~:text=A%20change%20in%20demand%20means,shifts%20either%
20left%20or%20right.&text=A%20change%20in%20quantity%20demanded,Figu
re%202.