Economics Assignment Essay Example

Economics Assignment Essay Example Economics Assignment Essay Economics Assignment Essay Seher Naseem Alam BBA a. Define carefully what is meant by a demand schedule or a curve. b. State the law of (downward sloping) demand. c. Illustrate the law of downward sloping demand with two cases of your own experience. Answer to a: Demand  curve, which graphs the  demand  schedule, shows how the quantity demanded of the good changes as its price varies  with   related goods, tastes, expectations, or the number of buyers, the quantity demanded at each price changes; this is represented by a shift in the  demand  curve. Answer to b: The  law of demand, the demand curve is almost always represented as downward-sloping, meaning that as price decreases, consumers will buy more of the good. If the  demand decrease: an inward shift of the curve. If the demand starts at  D1, and  decreases  to  D2, the price will decrease, and the quantity will decrease (here the quantity is constant as the supply curve is a straight line). This is an effect of demand changing. Answer to c: The demand VCR’s is the most evident example of the law of downward sloping demand. As the demand of VCR has decreased, the demand curve shifts downwards with price becoming low. The demand of Desktop pc is another example of downward sloping demand. Where a desktop pc has become less in demand and is available at lower prices. a. Define the concept of supply schedule or curve. b. Show that an increase in the supply means a rightward and downward shift of the supply curve. c. Contrast this with right ward and upward shift of the demand curve implied by the increase in demand. Answer to a: The Supply Schedule and Curve Table 1: A Supply Schedule for Apartments| Price ($1000s)| 100  | 99  | 98  | 97  | 96  | 95  | 94  | 93  | 92  | 91  | 90  | Quantity of Apartments Supplied| 10  | 9  | 8  | 7  | 6  | 5  | 4  | 3  | 2  | 1  | 0  | A supply schedule shows us, in the form of a table, the quantity of a good or service that would be offered by the sellers at each possible price. From the supply schedule, we can graph a supply curve. Answer to b: Changes in price results in movement along the supply curve, changes in other relevant factors cause a shift in supply, that is, a shift of the supply curve to the left or right. Such a shift results in change in quantity supplied for a given price level. If the change causes an increase in the quantity supplied at each price, the supply curve would shift to the rightward and downward. Answer to c: When consumers increase the quantity demanded  at a given price, it is referred to as an  increase in demand. Increased demand can be represented on the graph as the curve being shifted outward. At each price point, a greater quantity is demanded, as from the initial curve  D1  to the new curve  D2. More people wanting coffee is an example. In the diagram, this raises the equilibrium price from  P1  to the higher  P2. This raises the equilibrium quantity from  Q1  to the higher  Q2. A movement along the curve is described as a change in the quantity demanded to distinguish it from a change in demand, that is, a shift of the curve. In the example above, there has been an  increase  in demand which has caused an increase in (equilibrium) quantity. The increase in demand could also come from changing tastes and fads, incomes, complementary and substitute price changes, market expectations, and number of buyers. This would cause the entire demand curve to shift changing the equilibrium price and quantity. Bibliography: * www. toodoc. com/Demand-Schedule-or-curve-ebook. html * http://en. wikipedia. org/wiki/Supply_and_demand * eoearth. org/article/Supply_and_demand#The_Supply_Schedule_and_Curve * netmba. com/econ/micro/supply/curve/ * http://en. wikipedia. org/wiki/Supply_and_demand