Google
Wednesday 
August 31, 2016 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
Today's Index
Yesterday's Index
256.5

Help us compile the AmosWEB Free Lunch Index. Tell us about your last lunch.

Skipped lunch altogether.
Bought by another.
Ate lunch at home.
Brought lunch from home.
Fast food drive through.
Fast food dine in.
All-you-can eat buffet.
Casual dining with tip.
Fancy upscale with tip.

More About the Index
Favorite economist?

Adam Smith.
John Maynard Keynes.
Milton Friedman.
Friedrich Hayek.
Karl Marx.
John Stuart Mill.

ACCOUNTING PROFIT: The difference between a business's revenue and it's accounting expenses. This is the profit that's listed on a company's balance sheet, appears periodically in the financial sector of the newspaper, and is reported to the Internal Revenue Service for tax purposes. It frequently has little relationship to a company's economic profit because of the difference between accounting expense and the opportunity cost of production. Some accounting expense is not an opportunity cost and some opportunity cost is does not show up as an accounting expenses.

Visit the GLOSS*arama


DEMAND CURVE:

A graphical representation of the relation between the demand price and quantity demanded, holding all ceteris paribus demand determinants constant. A demand curve graphically illustrates the law of demand, the inverse relation between demand price and quantity demanded for a particular good. It is one half of the standard market model; a supply curve is the other half.
A demand curve is a useful graph that can summarize several of the more important aspects of demand. It graphically illustrates the law of demand and when combined with the supply curve forms the market model, one of the most useful tools found in economic analysis.

Plotting the Numbers

A demand curve is commonly derived from a simple demand schedule, such as the one for stuffed Yellow Tarantulas, a cute and cuddly stuffed creature from the Wacky Willy Stuffed Amigos line of collectibles, shown in the left half of the exhibit below. This schedule illustrates the law of demand relation between demand price and quantity demanded. As the demand price increases from $5 to $50, the quantity demanded decreases from 90 to 0 Yellow Tarantulas.
Demand ScheduleDemand Curve

Transferring the price-quantity pairs from the demand schedule to a graph reveals the demand curve for stuffed Yellow Tarantulas. This task is easily accomplished by clicking the [Plot] button. A $5 price is associated with 90 stuffed animals; a $10 price goes with 80 stuffed animals; and on it proceeds, until finally a $50 price is paired with 0 stuffed animals.

The demand curve is finalized by connecting these 10 points with a continuous line. The 10 prices corresponding to these 10 points, are but 10 of an infinite number of prices, each with a corresponding quantity. A continuous line includes these other possibilities. To reveal this line, click the [Draw] button. The end result is the demand curve.

What It All Means

A Demand Curve
Yellow Tarantulas
A Demand Curve
Here are a few observations about this demand curve.
  • First, as the price increases from a low of $5 to a high of $50, the quantity demanded of Yellow Tarantulas decreases from 90 to 0. Higher prices are related to smaller quantities. This relation, this inverse relation between demand price and quantity demanded, IS the basic law of demand.

  • Second, the demand curve represents maximum values. That is, if the price is $40, then the maximum quantity demanded is 20 Yellow Tarantulas. It is not 50, nor even 21, but only 20. Alternatively, if buyers buy 20 Yellow Tarantulas, then the maximum demand price they are willing and able to pay is $40, not $50, not even $40.01, but $40.

  • Third, this whole curve, every price-quantity combination on the curve, is demand. Demand is the entire range of prices and quantities, all pairs. Demand is the entire curve. In contrast, quantity demanded is any specific number of Yellow Tarantulas buyers are willing and able to buy at a specific demand price. Selecting a different price generates a different quantity demanded. Quantity demanded is a point on the curve.

  • Fourth, this demand curve represents hypothetical possibilities. It suggests a "What if" relation between demand price and quantity demanded. It indicates quantity demanded given a demand price, or demand price given the quantity demanded. If, for example, the demand price is $10, then buyers are willing and able to buy 100 Yellow Tarantulas. This does not mean that buyers will buy, are buying, or ever will buy 100 Yellow Tarantulas. It only indicates what they would buy at a $10 price.

<= DEMAND AND SUPPLY INCREASEDEMAND DECREASE =>


Recommended Citation:

DEMAND CURVE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2016. [Accessed: August 31, 2016].


Check Out These Related Terms...

     | demand price | quantity demanded | law of demand | demand space | consumer surplus | demand determinants | change in demand | change in quantity demanded | supply curve |


Or For A Little Background...

     | demand | demand schedule | market | quantity | price | unlimited wants and needs | economic analysis | exchange | scarcity | good | service | satisfaction |


And For Further Study...

     | market demand | competition | value | consumer sovereignty | competitive market | efficiency | income effect | substitution effect | elasticity | price elasticity of demand | elasticity and demand slope | aggregate demand curve |


Search Again?

Back to the WEB*pedia


APLS

State of the ECONOMY

Consumer Price Index Urban
November 2015
237.336
Up 0.0% from Oct. 2015 Source: BLS

More Stats

RED AGGRESSERINE
[What's This?]

Today, you are likely to spend a great deal of time wandering around the shopping mall hoping to buy either a large red and white striped beach towel or a bottle of blackcherry flavored spring water. Be on the lookout for poorly written technical manuals.
Your Complete Scope

This isn't me! What am I?

A lump of pure gold the size of a matchbox can be flattened into a sheet the size of a tennis court!
"Success is the child of audacity. "

-- Benjamin Disraeli, British statesman

SMA
Structural Moving Average
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2016 AmosWEB*LLC
Send comments or questions to: WebMaster