Question

Private Consumption – Supply / Demand

List three (3) goods or services that you buy frequently. Fill in the following details for each goods or service in the provided table:

1. The current price and the quantity that you normally buy.
2. A higher price than the current price and the quantity that you would buy at that price.
3. A lower price than the current price and the quantity that you would buy at that price.

Item 1

Price	Quantity Bought

Item 2

Price	Quantity Bought

Item 3

Price	Quantity Bought

Analysis

Now, consider the price, and the quantity that you are willing to purchase at that price and answer the following questions.

1. How does price influence the quantity of an item you are willing or able to purchase?

2. Does it make a difference if the item is an essential item, like food vs. a luxury item like a sports car whether you are likely to continue to purchase the item even if the price goes up?

3. Consider what you can infer from your own purchasing habits about price and demand? Explain your answer.

Answer 1

The answers to the first part of the question is listed in the table given below:

Item 1=pen
Price	Quantity Bought
10	2
20	2
5	3
Item 2=copies
Price	Quantity
40	3
50	2
30	4
Item 3=shampoo
Price	Quantity
200	2
400	1
150	3

2nd part questions.

Q1- Price and quantity purchased are inversely related to each other. As price rises, quantity purchased decreases and vice versa. But for very essential commodities, price really doesn't affect the quantity purchased.

Q2- For an essential item like books required for exams, even if the price goes up, purchase remains the same or may increase even. But for a luxury good like imported cars, if the price goes up, the quantity purchased obviously falls.

Q3- Price and quantity purchased are inversely related to each other. As price rises, quantity purchased decreases and vice versa. But for very essential commodities, price really doesn't affect the quantity purchased. For luxury items, definitely the law of demand holds true.