Principles of Economics- Mankiw (5th) 65

# Principles of Economics- Mankiw (5th) 65 - Figure 4-1...

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CHAPTER 4 THE MARKET FORCES OF SUPPLY AND DEMAND 69 THE DEMAND SCHEDULE AND THE DEMAND CURVE We have seen that many variables determine the quantity of ice cream a person demands. Imagine that we hold all these variables constant except one—the price. Let’s consider how the price affects the quantity of ice cream demanded. Table 4-1 shows how many ice-cream cones Catherine buys each month at dif- ferent prices of ice cream. If ice cream is free, Catherine eats 12 cones. At \$0.50 per cone, Catherine buys 10 cones. As the price rises further, she buys fewer and fewer cones. When the price reaches \$3.00, Catherine doesn’t buy any ice cream at all. Table 4-1 is a demand schedule, a table that shows the relationship between the price of a good and the quantity demanded. (Economists use the term schedule be- cause the table, with its parallel columns of numbers, resembles a train schedule.)
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Unformatted text preview: Figure 4-1 graphs the numbers in Table 4-1. By convention, the price of ice cream is on the vertical axis, and the quantity of ice cream demanded is on the Table 4-1 C ATHERINE ’ S D EMAND S CHEDULE . The demand schedule shows the quantity demanded at each price. P RICE OF I CE-C REAM C ONE Q UANTITY OF C ONES D EMANDED \$0.00 12 0.50 10 1.00 8 1.50 6 2.00 4 2.50 2 3.00 demand schedule a table that shows the relationship between the price of a good and the quantity demanded Price of Ice-Cream Cone 2.50 2.00 1.50 1.00 0.50 1 2 3 4 5 6 7 8 9 10 11 Quantity of Ice-Cream Cones \$3.00 12 Figure 4-1 C ATHERINE ’ S D EMAND C URVE . This demand curve, which graphs the demand schedule in Table 4-1, shows how the quantity demanded of the good changes as its price varies. Because a lower price increases the quantity demanded, the demand curve slopes downward....
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