The demand schedule (or demand function or curve) for a good shows the total quantities (Q) that buyers are willing and able to buy at various prices (P) in some period of time. For example, here is a demand function illustrating the very special but convenient case of linear demand (with
Q measured in some physical unit of quantity such as tons and P measured in dollars):
Q = 2100 - 50P
Sometimes it is convenient to express this in the inverse form showing the prices that buyers are willing to pay for various quantities. (P is a function of Q.) This is called the demand-price function.
a. State the demand-price function corresponding to the above demand function.
b. Plot the corresponding demand curve on graph paper - with Q on the horizontal axis and P on the vertical axis. Label this demand D1.
I. The Case of Fixed Supply
A supply schedule (or function or curve) defined analogously shows the total quantities (Q) that sellers are willing to sell at various prices (P) in a given period of time. One very special case is that of a fixed supply, where the quantity supplied is a constant, independent of price, such as
Q = 1200 (This type of supply may apply, for example, in the short period of time when a given quantity of a perishable commodity is brought to market and must be sold at any price or go to waste; or, in a slightly different meaning of supply, again in the short run, it may apply to a service such a= /ousing, or even in the long run to the services of a permanent resource such as land.)