The Law of Demand, Demand Schedule, and Demand Curve

Meaning and Definition of the Law of Demand

The law of demand states the relationship between the price of a commodity and the quantity demanded of it. 

It studies and explains the spending and purchasing habits of consumers at any time.

Whereas suppliers of goods and services tend to increase the supply of their products to the market (as a result of the increase in prices), consumers tend to react inversely. 

Consumers shrink their demand for goods and services whose prices have begun to increase.

This decrease in demand happens because consumers have to make purchases within their own financial limits. Naturally, they tend to curtail their purchases of costly items and shift their attention towards lower-cost commodities.

The law of demand is based on this trend of decreasing demand for goods and services whose prices are spiralling upwards.

So, the law of demand and the law of supply are inversely related to each other.

Definition of The Law of Demand

The law of demand states that, other factors remaining constant, as the price of a good or service increases, consumer demand for it will decrease. 

So, according to this law of demand, the price of a commodity and the demanded quantity are inversely related to each other. 

If the price rises, demand for the quantity will decrease, and if the price falls, the demanded quantity will increase.

• The demand for any commodity is expressed as @ the rate of its price and at a particular point in time or during a given period of time.
• Or, in other words, the demand for any quantity is to be mentioned in terms of its price at a particular point in time or during a given period of time.

Example:

The demanded quantity of sugar was 100 kg @ 30/per kg as at 9 AM. At 12 Noon, the demand was 80 kg @ 35/per kg.

Demand for sugar during the period 10 AM to 12 Noon was 200 kg @ 30/per kg.

Demand Schedule

A demand schedule is a chart showing various prices of a commodity and the quantities demanded at each price range.

Let me give an example here.

Suppose a consumer goes to purchase Sugar. He buys 5 kg of sugar when the price is Rs.30 per kg. Suppose the price increases to Rs. 40. 

Then he will buy only 4 kg, and if the price increases to Rs. 50, he will buy only 3 kg. 

As the price goes on increasing, he goes on decreasing his consumption. 

Or, conversely, when the prices fall, he will increase the quantity of purchases. 

The same thing can be represented in the demand schedule as below.

Demand Schedule for Sugar                                                      

Price of sugar	Qty. demanded
30	5 kg
40	4 kg
50	3 kg

The above example is for a particular person's individual demand. So, if we consider the demand of other people also for the commodity of Sugar, then it will be deemed as the total market demand for sugar. Suppose there are 10 people and each one demands various quantities at each price level. Then, you will have to add all the quantities demanded by all people for each price level to know the total demand at each price level. This is known as market demand for sugar. 

Demand Curve

A demand curve is a graph representing the relationship between the price of a commodity and the quantity demanded by consumers at each price level of that commodity. It is a graphical representation of the demand schedule.

So, from the above figures of demand for sugar at different prices, we can prepare the demand curve as shown in the figure below.

Demand Curve for Sugar

In the figure above (drawn by me by hand), the demand curve is the slant line at the top-right corner of the image. It slopes downward because, with every increase in price, demand decreases.

Regarding factors affecting supply and demand, you may view for details at this link.