Fisheries Economics

2.1.5. Demand Curve

When the demand schedule is plotted in a graph, is demand curve obtained. Generally, a demand curve slopes downwards indicating that other things remaining constant, a fall in price will cause an increase in demand and a rise in price will lead to a fall in demand. The downward sloping or in other words negatively sloped demand curve expresses the inverse relationship between quantity demanded and price.

Rarely we see a demand curve having upward or positive slope. Such a demand curve indicates the direct relationship between demand and price. In other words, more will be demanded at a higher price.

In textbooks, demand relations are often presented as graphs rather than tables. Mathematically the two are equivalent. Some people can't stand graphs, but many others find that graphs are easier to take in at a glance than tables are. So, for those of you who like graphs, here is that demand relation graphed:

DEMAND FOR SHRIMP

Price

Rs. 6| *

Rs. 5| *

Rs. 4| *

Rs. 3| *

Rs. 2| *

Re. 1| *

....:....:....:....:....:....:....:....:....:....:....:....:

5 10 15 20 25 30 35 40 45 50 55 60 Quantity

The points form a line that slopes downward from left to right. Most demand graphs do this. The downward slope means that at higher prices less is sold, while at lower prices more is sold.

Each * on the graph corresponds to a price-quantity pair in the table. This is shown in the graph below by labelling with A through F the points on the graph and the corresponding columns in the table.

DEMAND FOR SHRIMP

Price

Rs. 6| F

Rs. 5| E

Rs. 4| D

Rs. 3| C

Rs. 2| B

Re. 1| A

....:....:....:....:....:....:....:....:....:....:....:....:

5 10 15 20 25 30 35 40 45 50 55 60 Quantity

A B C D E F

Price Re.1 Rs.2 Rs.3 Rs.4 Rs.5 Rs.6

Quantity 60 30 20 15 12 10

Which point on this graph tells you the quantity demanded when the price you charge is Rs. 2?

Here's the graph again:

DEMAND FOR SHRIMP

Price

Rs.6| F

Rs.5| E

Rs.4| D

Rs.3| C

Rs.2| B

Re.1| A

....:....:....:....:....:....:....:....:....:....:....:....:

5 10 15 20 25 30 35 40 45 50 55 60 Quantity

A B C D E F

Price Re.1 Rs.2Rs.3 Rs.4 Rs.5 Rs.6

Quantity 60 3020 15 12 10

When you change your price, you move along the demand graph from one point to another. Suppose your price was Rs.2 and you change it to Rs.4. You move along the demand graph to what point?