Question

Please explain with a graph, how a changing quality is influencing the demand function. Consider two cases (1) the consumers preferring high quality are more affected by a quality change and (2) the consumers preferring low quality are more affected. Please explain the graphs.

Answer 1

Basically when we study about the demand function we always consider the relationship of Price of the commodity and the Quantity demanded at that price keeping other factors constant. But as in the question it is mentioned to establish a relationship betweem the Quality produced and the Quantity Demanded, so we would be taking Quality of commodity on Y-axis and Quantity demanded on X-axis and will be further explaining that what hapeens to demand when (A) the quality is high and how people are affected or (B) when quality is low and how people are affected to it

(A) When Quality is high It means people would clearly be preferring the more of commodity with their respective income and would not be shifted to its subsitutes resulting in increase in demand which is shown by the following figure

(B) When Quality is low It means people would clearly be preferring the less of commodity with their respective income and would be shifted to its subsitutes resulting in decrease in demand which is shown by the following figure