Demand ScheduleExplained with Examples and Graphs

Written By:
Lisa Borga

What is a Demand Schedule?

A demand schedule is a chart that indicates the number of services or goods that will be demanded at a certain price during a certain period of time.

By looking at the quantity demanded and price in the chart, it can be seen if the demand is inelastic or elastic.

By plotting the data shown in the table on a graph, a demand curve can be produced, which will show the correlation between quantity demanded and price.

This demand curve will generally illustrate the law of demand.

This law states that when a price rises, the quantity demanded decreases, and when a price decreases, the quantity demanded increases if the other factors influencing demand remain constant.

Demand schedules are frequently used along with supply schedules. This allows people to compare the way in which demand and supply affect product prices.

Explaining the Demand Schedule

A demand schedule is a table that displays the relationship that exists between demand and price.

If a demand schedule is for an elastic good, the quantity demanded will change significantly with a change in price.

In contrast, the demand schedule for an inelastic good would show only a gradual change in demand in response to a change in price.

For a perfectly inelastic good, the quantity demanded would not change in response to a change in price. The demand would remain constant.

The demand schedule is made up of two columns.

The first column in the chart contains the different prices of the asset, such as the prices for an entire year.

The second column consists of the quantity demanded at each of the listed prices.

Basically, the table displays a list of prices for a good or service and the quantity demanded in the market for each of those prices. There are two types of demand schedules. One of these types is the individual demand schedule.

This schedule shows the demand for a particular good for an individual or a household at different prices.

The other type of demand schedule is a market demand schedule which shows the demand for a product or service at different prices for the whole market.

This schedule is an aggregate of individual demand schedules.

Example of a Demand Schedule

Here is an example of how a demand schedule works.

Joe owns a stand that sells soft pretzels. He would like to find out how changing his prices would change how much he sells.

He made a schedule that showed that when he charged $3.00, he sold 500 pretzels.

However, when he increased the price to $3.50 a pretzel, he only sold 350 pretzels.

When he increased the price to $3.75, he sold 300 pretzels.

Then, at $4.00, he sold 200 pretzels.

Joe discovered that when he increased prices, people bought fewer pretzels.

Customers will look for alternative products if they believe an item is expensive, overpriced, and uninteresting.

This table shows the changes in the price of the soft pretzels and the corresponding changes in demand.

Once Joe looked over the market demand schedule, he decided not to raise prices because due to the decreased demand, he would not make more money.

He could continue to experiment with increasing prices to find if there is a price increase at which he would still have sufficient demand to increase profits.

Market Demand Schedule

Putting the prices and quantity demanded on a demand curve presents the information in an easy to identify visual format.

Prices are on the y-axis, and demand is on the x-axis.

Demand and Supply Schedule

A supply schedule presents data in a chart that shows the number of goods or services that will need to be produced to satisfy the demand of consumers at a certain price.

This is different than the demand schedule, which shows the relationship between quantity demanded and price.

A supply schedule typically shows a positive relationship between quantity supplied and price.

Whereas a demand schedule generally indicates an inverse relationship between quantity demanded and price.

This shows why the supply curve is upward sloping in contrast to the demand curve, which is downward sloping.

The supply schedule will indicate the number of goods or services a supplier will be able to offer in order to market their product at a certain price.

Suppliers with large production facilities will generally offer lower prices.

If factors such as the cost of inputs stay constant, then producing the products on a large scale basically makes them less expensive to produce.

This allows these producers to sell their products at a lower price, thus outcompeting other producers.

Limitations

Demand schedules are very useful. However, they have their limits.

The law of demand shows the effect of price on demand.

But, other factors can affect demand as well, such as the expectation of future supply or prices, the income of consumers, the prices of related goods, the effect of advertising, or people’s tastes.

Changes in these factors can cause the demand curve to shift.

This means the quantity demanded would change at every price point. So, new calculations would be necessary.

For example, if it was suddenly found that eating candy bars could prevent cancer, the previous demand schedules for candy bars would no longer be relevant and could not be used to estimate future demand and set pricing.

FAQs

What is a Demand Schedule?

A demand schedule shows the number of goods consumers will buy at a given price. This schedule follows the law of demand; thus, it indicates that there is an inverse relationship between quantity demanded and price. An example of this would be movie tickets. When the price of movie tickets goes up, fewer people are going to buy tickets to see a movie.

Are There Different Kinds of Demand Schedules?

There are two different types of demand schedules. The first type of demand schedule is an individual demand schedule, and it shows the amount that a single entity desires at various prices. In contrast, the second table shows market demand. It indicates the demand of multiple entities or the market as a whole.

How Do I Make a Demand Schedule?

Before actually making the schedule, it is important to gather any information necessary, such as relevant prices as well as the quantities demanded in order to make the table. Then, the schedule, if you are using the table format, will have two columns. The first column will consist of the various prices for a specific period, and the second column will have the quantities demanded at each price.

Key Takeaways

• A demand schedule is a table that indicates the number of goods or services that will be purchased at each price.
• The law of demand states that there is an inverse relationship between price and demand. Therefore, if all other factors influencing demand stay the same, demand will decrease if a price increases.
• Demand schedules make it easier to visualize the inverse relationship that exists between demand and price.