The Demand Curve - 1 |
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Australia is a market based economy. Goods and services are bought and sold freely, and most production is based on decisions made by private sector firms.
In a market, the two key forces are those of supply and demand.
In a market, the two fundamental variables are price and quantity.
We can prepare a table of individual demand by asking consumers what quantities of a good they would buy, at different prices.
| Price (per unit) | Quantity Demanded per week | |||||
|---|---|---|---|---|---|---|
| Person A | Person B | Person C | Person D | Person E | Total | |
| 5 | 4 | 2 | 3 | 3 | ||
| $1.50 | 4 | 3 | 2 | 3 | 2 | 14 |
| $2.00 | 3 | 3 | 2 | 1 | 1 | 10 |
| $2.50 | 2 | 2 | 1 | 1 | 0 | 6 |
| $3.00 | 2 | 1 | 1 | 0 | 0 | 4 |
| $3.50 | 1 | 1 | 0 | 0 | 0 | 2 |
In the market summarised above, we can see that 17 items would be bought per week,
if the price charged by suppliers is $1 per item.