Demand Schedule and Demand Curve
What is the relationship between price and the amount demanded? To help you understand the relationship let's return to RIU and analyze demand for 'seats' in the University's classes. The first step will be the distribution of a survey to all prospective students. On the survey they are asked to identify what price they would be willing to pay to attend school. When they return the surveys to the university the information is compiled and put into a table, the table that appears below and is called a demand schedule. The demand schedule shows the number of individuals who would enroll at RIU at each price (tuition rate). In this example we can see that 13,000 people indicated that they would pay at least $2,000. If the university charged $6,000, then there would be 9,000 people who would enroll.
Demand Schedule for RIU
Tuition |
# of students applying |
$ 10,000 |
5,000 |
$ 8,000 |
7,000 |
$ 6,000 |
9,000 |
$ 4,000 |
11,000 |
$ 2,000 |
13,000 |
Demand Curve for RIU
As valuable as the information is in the table, we could also translate the information into a graph to help visualize the situation. The schedule can be translated into the graph by just plotting the points from the schedule onto the axes (price on the vertical and quantity on the horizontal). The demand curve shows the number of individuals who would enroll at RIU at each price (tuition rate). Just as with the demand schedule, we can see that 13,000 people indicated they would pay at least $2,000. If the university raised its price and charged $6,000, then 9,000 people would enroll. It is the same information, it is simply presented in a different format. In both cases we see that an increase in price will reduce the quantity demanded.
Demand Curve for RIU
