Question

The following table shows the demand schedule for 3 consumers in a market.

Price in (Rs)	Consumer 1 Demand in (kgs)	Consumer 2 Demand in (kgs)	Consumer 3 Demand in (kgs)	Market Demand
10	1	2	(i) ______	6
8	2	(ii) ______	4	9
6	3	4	5	12
4	4	5	6	(iii) ______

Based on the above hypothetical schedule answer the following questions.

1. What is the demand of Consumer 3 priced at Rs 10 (i)?
2. What is the demand of Consumer 2 priced at Rs 8 (ii)?
3. Calculate the total market demand priced at Rs 4 (iii).
4. From the above given table examine the relationship between price and demand.
5. Mention any one exception to the law of demand.

Answer 1

1. In the table, the demand for Consumer 3 at a price of Rs 10 is missing. However, the total market demand at this price point is 6 kg. Given that Consumer 1 demands 1 kg and Consumer 2 demands 2 kg at this price, we can calculate the demand for Consumer 3 as follows:
   Total Market Demand = Consumer 1 + Consumer 2 + Consumer 3
   6 kg = 1 kg + 2 kg + Consumer 3
   Consumer 3 = 3 kg
   Thus, the demand for Consumer 3 at Rs 10 is 3 kg.
2. From the table, at Rs 8, the total market demand is 9 kg, with Consumer 1 demanding 2 kg, and Consumer 3 demanding 4 kg. The demand for Consumer 2 can be calculated as:
   9 kg = 2 kg + Consumer 2 + 4 kg
   Consumer 2 = 3 kg
   Thus, the demand for Consumer 2 at Rs 8 is 3 kg.
3. At Rs 5, Consumer 1 demands 4 kg, Consumer 2 demands 5 kg, and Consumer 3 demands 6 kg. Thus, the total market demand can be calculated as:
   Total Market Demand = 4 kg + 5 kg + 6 kg
   Total Market Demand = 15 kg
4. The relationship depicted in the table clearly illustrates the inverse relationship between price and demand, a fundamental concept in economics known as the law of demand. As the price of a good decreases, the quantity demanded by consumers increases. This is evident at all price points in the given table, confirming this economic principle.
5. One well-known exception to the law of demand is the Giffen Good. A Giffen good is a type of inferior good that people consume more of as the price rises, violating the basic law of demand. This occurs because the increase in price of the Giffen good (which is a staple food like bread, rice, etc.) makes the consumer too poor to afford more preferable substitutes, thus paradoxically increasing the quantity demanded of the inferior product.