Question

In: Accounting

If someone told you that a demand curve is good long term evidence of the consumer...

If someone told you that a demand curve is good long term evidence of the consumer buying activity would you agree or disagree?

Solutions

Expert Solution

The law of demand states that a higher price leads to a lower quantity demanded and that a lower price leads to a higher quantity demanded.

Demand curves and demand schedules are tools used to summarize the relationship between quantity demanded and price.

Demand for goods and services

Economists use the term demand to refer to the amount of some good or service consumers are willing and able to purchase at each price. Demand is based on needs and wants—a consumer may be able to differentiate between a need and a want, but from an economist’s perspective they are the same thing. Demand is also based on ability to pay. If you cannot pay, you have no effective demand.
What a buyer pays for a unit of the specific good or service is called price. The total number of units purchased at that price is called the quantity demanded. A rise in price of a good or service almost always decreases the quantity demanded of that good or service. Conversely, a fall in price will increase the quantity demanded. When the price of a gallon of gasoline goes up, for example, people look for ways to reduce their consumption by combining several errands, commuting by carpool or mass transit, or taking weekend or vacation trips closer to home. Economists call this inverse relationship between price and quantity demanded the law of demand. The law of demand assumes that all other variables that affect demand are held constant.

Therefore, If someone told me that a demand curve is good long term evidence of the consumer buying activity I would agree .


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