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You may have already realized, that describing the behaviour of demand has become increasingly complex as we progress through this article. Fortunately, economics provides us with the ability to portray the behaviour of demand graphically, through the use of the Demand Curve. Consider the following example:
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Let's create a hypothetical market which consist of 3 consumers- A, B & C. Each of these consumers has a different level of income, and different preferences in terms of the substitute goods, in this case competing leisure products e.g. cinema, music CDs, video games, etc ,in the market.
At a given price level each of the consumers will be willing and able to purchase a different quantity of the product. We can represent their individual demand at various price levels, as their individual demand schedule, alongside their combined market demand schedule, in the table below.
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| Price per DVD |
A's demand |
B's demand |
C's demand |
Total market demand |
| £5 |
6 |
18 |
50 |
74 |
| £15 |
2 |
8 |
20 |
30 |
| £20 |
0 |
5 |
18 |
23 |
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Applying the theory covered so far in this article, the law of demand would appear to be followed, and consumer C appears to have the greatest ability and willingness to purchase the product. The market demand schedule can be represented graphically as a Market Demand Curve, as shown in figure 1, by plotting Price of the good, on the vertical axis, against Total Market Demand for the good, along the horizontal axis.
| Fig 1 : Market Demand Curve |
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We have used specific data to plot the resultant demand curve, we could have also produced Individual Demand Curves for each of our three consumers. In practice demand curves are more commonly used to illustrate general behaviour, without specific price and quantity data being given. In addition demand curves are often represented by straight lines, and this will be the case in many of the 'curve' diagrams presented in this article.
One final important point to note, before we move on to consider factors other than price which can effect demand, is that of time period. The levels of demand we have considered in both of our examples, DVDs and Diamond rings, need to be restricted to a specific / given time period, otherwise we could not have offered values for them.
Level of Demand is considered over a given period of time, be that one month, one year, etc.
In the case of our DVD example the demand was for 12 months / one year. In that given period consumer C is willing and able to buy 50 DVDs. Completely different levels of demand for the product would be recorded if the time period was reduced to one month, far lower levels as you would expect. For consumer C this may be in the region of 4 / 5 DVDs. Although not often emphasized all the theories presented thus far concern behaviour over a given time period.
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