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The Demand Curve

                                 The Demand Curve   

In the market for the Pizza,the demand Curve for pizza is a simple schedule or graph that tells us us how many slices people would be willing to buy at different prices.by convention,economies usually put prices on the vertical axes of the demand curve and the quantity on the horizontal axes.
       A fundamental property of the demand curve is that is downward curve sloping with respect to price.For example,the demand curve for pizza tells us that as the price of pizza falls,buyers will buy more slices.Thus the daily demand curve for pizza in Chicago in a given day might look like the curve seen in the figure bellow.
      The demand curve in the figure tells us that when the price of pizza is low say $2 per slices --buyers will want to buy 16000 slice per day,whereas, where they will want to buy only 12000 slices per day at the price $3,an only 8000,at the price for $4.The demand curve for pizza --as for any other good --slopes downward for multiple reasons.Some of the reasons have to do with the individual consumer's reaction to price changes.Thus,as pizza becomes more expensive a may switch to the chicken sandwiches,Hamburgers,or other foods that substitute for pizza.This is called the substitution Effect of a price change. In addition, a price:A consumer simply cant afford to buy as many slices of pizza at higher prices as at lower prices.this is called the income effect of a price change.


Another reason that the demand curve slopes downward is that consumers differ in terms of how they are willing to pay for the goods.The cost benefit principle tells us that a given person will buy the good the benefit he expects to receive from it exceeds its cost.(Cost benefit principle will be in next blog).

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