The demand of an individual consumer for a commodity is called individual demand. An individual demand schedule is a tabular statement of prices and quantities showing how much an individual consumer will buy of a commodity at each of the given prices.
It does not say anything about what the price is. It is a list of the various quantities that the individual consumer will buy at different prices. While preparing an individual demand schedule, it is assumed that other factors like prices of the related goods, income of the consumer, etc., do not change. A hypothetical demand schedule of a consumer, showing the quantities demanded of apples at different prices is shown in Table 1.1.
We can see from the table that when the price of apples is Rs. 12 per kg., only one kg. of apples is demanded. When the price comes down to Rs. 8 per kg., the consumer buys 5kg. of it. Hence, we see an inverse relationship between the price and the quantity demanded. This inverse relationship between the price and quantity demanded of a commodity is known as ‘the law of demand’, which is explained later in the chapter.
The combinations of the prices and the quantities for an individual consumer is shown in the demand schedule, when plotted on a graph, become the individual demand curve. This is a graphical representation of the combinations of the prices and the quantities of the commodity under consideration. While economists do use arithmetical demand schedule, the demand schedule for a commodity is more usually shown graphically by drawing the demand curve for the commodity in question.
In Fig. 1.1, various market prices are measured along the vertical axis. Quantities demanded of the commodity are measured along the horizontal axis. Now, the demand schedule of Table 1.1 is plotted as a series of points in Fig. 1.1. The information presented in this figure is exactly the same as in Table 1.1 But, the form of presentation is different. Now, we have it in the form of a curve.
At point ‘A’ (Fig. 1.1), the consumer is buying 1 kg. of apples, when the price of apples is Rs. 12 per kg. Point ‘B’ represents the purchase of 2 kg. of apples at the reduced price of Rs. 11 per kg.
Similarly, ‘C’, ‘E’, ‘F’ and ‘G’ represent other combinations of prices and quantities. By joining these points, we have a smooth curve DD, called the demand curve for apples. It shows the quantities of apples that the consumer would buy at each of the prices. The demand curve shows the relation between the price of the commodity and the quantity demanded. That is why, it is also called price demand curve.
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Given price, corresponding quantity demanded can be read out from the curve and vice-versa. The demand curve is downward sloping indicating that with the fall in price, quantity demanded increases. It is drawn on the assumption that other factors influencing demand, viz., prices of related goods, incomes and tastes of consumers, etc. remain unchanged.