Question

1. Why knowledge of the demand law is so important to know for us, consumers?

2. Does QD (Quantity Demanded) and D (demand) means the same?

3. What is the result when the demand increases and supply increases? What happens to the Quantity produced?

Answer 1

1. The demand is derived from the law of diminishing marginal utility. The law of demand states that the demand for good varies inversely with the price of a good. As the wants of consumers are limited and the availability of resources are limited, consumers try to maximize the utility by consuming goods that they need most or as per their needs. So, with the increase in price consumers tend to consume less which would affect the production of a supplier. Hence gaining an idea on pricing a good would help both consumer and a producer.

2. No. Quantity demanded is the schedule of quantities consumed at various prices, change in quantity demanded is movement along the demand curve whereas a change in Demand is rightward or leftward shift of the demand curve

3. With the increase in demand and supply, both of the curves shifts right showing increased the consumption of good resulting a decreased price. The quantity produced increases because of increased demand