You'd be willing to pay a lot for that first piece to satisfy your hunger. It makes sense that our marginal benefit, or willingness to pay for a good, would decline as we consume additional units because we get less additional satisfaction from each successive unit consumed. For example, at lunch time you decide to buy pizza by-the-piece. The demand curve reflects our marginal benefit and thus our willingness to pay for additional amounts of a good. Another hint when graphing the demand curve is to remember that demand descends. A helpful hint when labeling the axes is to remember that since P is a tall letter, it goes on the vertical axis. When graphing the demand curve, price goes on the vertical axis and quantity demanded goes on the horizontal axis. The graphical representation of the demand schedule is called the demand curve. The demand schedule shows the combinations of price and quantity demanded of apples in a table format. Recall, that we represent economic laws and theory using models in this case we can use a demand schedule or a demand curve to illustrate the Law of Demand. It states that there is an inverse (or negative) relationship between the price of a good and the quantity demanded. The Law of Demand captures this relationship between price and the quantity demanded of a product.

As the price rises (again holding all else constant), the quantity of apples demanded decreases. Assuming only price changes, then at lower prices, a consumer is willing and able to buy more apples. The market brings together those who demand and supply the good to determine the price.įor example, the number of many apples an individual would be willing and able to buy each month depends in part on the price of apples. These markets range from bartering in street markets to trades that are made through the internet with individuals around the world that never have met face to face.Ī market consists of those individuals who are willing and able to purchase the particular good and sellers who are willing and able to supply the good. Teach a parrot the terms of 'supply and demand' and you’ve got an economist.Ī market brings together and facilitates trade between buyers and sellers of a good or services.

Supply curve generator