This preview shows page 1. Sign up to view the full content.
Unformatted text preview: l other influences on consumers’ planned purchases
remain the same.
The table in Fig. 3.1 is the demand schedule for
energy bars. A demand schedule lists the quantities
demanded at each price when all the other influences
on consumers’ planned purchases remain the same.
For example, if the price of a bar is 50¢, the quantity
demanded is 22 million a week. If the price is $2.50,
the quantity demanded is 5 million a week. The
other rows of the table show the quantities demanded
at prices of $1.00, $1.50, and $2.00.
We graph the demand schedule as a demand curve
with the quantity demanded on the x-axis and the
price on the y-axis. The points on the demand curve
labeled A through E correspond to the rows of the
demand schedule. For example, point A on the graph
shows a quantity demanded of 22 million energy bars
a week at a price of 50¢ a bar. The Demand Curve FIGURE 3.1
Price (dollars per bar) 56 6/22/09 3.00 E 2.50 D 2.00 C 1.50 B 1.00 Demand for
A 0.50 0 5 15
Quantity demanded (millions of bars per week) Quantity demanded Willingness and Ability to Pay Another way of look- Price ing at the demand curve is as a willingness-and-ability-to-pay curve. The willingness and ability to pay is
a measure of marginal benefit.
If a small quantity is available, the highest price
that someone is willing and able to pay for one more
unit is high. But as the quantity available increases,
the marginal benefit of each additional unit falls and
the highest price that someone is willing and able to
pay also falls along the demand curve.
In Fig. 3.1, if only 5 million energy bars are available each week, the highest price that someone is
willing to pay for the 5 millionth bar is $2.50. But if
22 million energy bars are available each week, someone is willing to pay 50¢ for the last bar bought. (dollars per bar) (millions of bars
per week) A 0.50 22 B 1.00 15 C 1.50 10 D 2.00 7 E 2.50 5 A Change in Demand
When any factor that influences buying plans other
than the price of the good...
View Full Document