,, , So let's look again at, again, at the demand for tomato. But this time, using a little math. Just to organize our thinking a little more. That's the whole reason we're using math, right? To organize our thinking a little more. Let's start with a very simple function. That kind of describes the demand for tomatoes. We can say that the quantity demanded of a good, let's say quantity x is going to be a function of several factors that we have already illustrated er, listed here. One is the price of x in this case tomatoes. The price of the own good. 2 is the price of a related good. Let's say, bread, or red bell peppers. We call that price of y. The income that the consumers have, which we're going to say I to illustrate income. And finally, the preferences, or stasis, that consumers have determine their own kind of value for their own good. And those 4 things are basically the factors that determine the demand for any product, x, in this case, tomatoes. So we can represent a demand in this way, a very general way. And then, we can be more specific about the actual quantities of demand at any price of tomatoes. And we can do that with a table. So let's say that we have the price of tomatoes. And how many tomatoes, quantity demanded, is going to be bought at every price. So we can start with a relationship with different numbers here. And this is called a demand scale. It's called a scale because it's kind of like a train. Scale, right? It tells you two columns with 2 different numbers aren't related to each other. So when the price is 0, let's say people demand about 12. And this could be 12 tomatoes. Or you want to put units here, it could be 12,000. But the relationship, we're more interested in the. In the relationship, the direction of the relationship not so much the units. When the price increased to 2, we know that when the price of tomatoes increases people will demand less tomatoes. So we can easily represent that by. Writing a lower number here. And when the price cont inue to increase, the quantity of tomatoes demanded by people goes down because that's what economists call the law, the Law of Demand, right? Meaning that when the price of a good increases, if all the things equal stay the same and nothing else changes when the price of a good increases, the quantity consumed of the good goes down, and when the price of. The good decreases. Other things the same, the quantity demanded of the good goes up. So, in that way the law of demand will continue to have the numbers in the same way. When the price of tomatoes is 6, 6 right there. The quantity of tomatoes demanded is 6. When the price of tomatoes, 8, the quantity of tomatoes even goes down to 4. When the price of tomatoes is 10, the quantity of tomatoes goes down, go down again to 2. And when the price of tomatoes is 12, the quantity of tomatoes at that point is 0, or this is an assumption. We're making up this number. The quantity of tomatoes, demand it goes down to zero. So this could be like, thinking about you doing an option and you're telling people, you have a people in front of you and you're asking people how many of you will be willing to buy one tomato, one pound of tomato at this price and you start with zero and 12 people raise their hand, and then you go up to 2 and only 10 people raise their hand, and then you go up in price to 4 and then only 8 people raise their hand so as you increase the price you actually get rid of some consumption of tomatoes. And this describe the relationship between the quantity of tomatoes demanded and one of the factors which is the price. And we concentrate on the price because as you'll see when we introduce the supply this is kind of the signal That's going to allow buyers and sellers to communicate with each other. So it's not that the other factors are not important, it's just that we concentrate on the signal here, to develop this model of supply and demand. And more importantly, that's going to be more relevant when we use. A diagram to describe the same information we had in the table. This demand scale. On the demand scale, we can represent that in a table, or we can represent it in a diagram. The region of x, y diagram. What we're going to do, we're going to put quantity down here. Quantity of x. This is tomatoes. And the price of x in the other axis. And all we're going to do. We're going to take these numbers from the table, and we're going to put 'em here in the diagram. Right? So we're just representing the same information in two different ways. So, for instance, when the price of tomatoes is 12. There is no demand at all. People don't demand tomatoes. When the price of tomatoes goes down to 10, then people demand two tomatoes. Right? And we can put that point in the curve. When the price of tomatoes goes down to 8. Then we have 4, alright? So that's around here. When the price of tomatoes is 6, then we have less tomatoes consumed, more tomatoes consumed. In this case, 6. When the price of tomatoes is 4, and we have 8. And when the price of tomatoes is 2, we have 10. And when the price of tomatoes is 0. You have 12 tomatoes being bought, or 12 people buying tomatoes. And if we connect all the dots here, since the numbers are changing by you know, two by two, it should really be a straight line right? I mean this is like a professional drawing here. But, it's a straight line connecting all the dots and we're going to call this the. Demand curve. Demand curve for tomatoes. And here it's the same it's the same information that we have actually compound or made up in our demand schedule. We just simply representing that information with a graph. Now, that graph is useful because it's going to be, allows to save some, some time when we when we bring that supply for tomatoes. But in the meantime, we're going to use both the table and the diagram in order to explain different changes and how this demand change. Eventually, our goal is to get. Once you get really comfortable with the graph, we're going to get rid of the table. And we're going to focus just on the graph. Because it's a lot easier to actually analyze changes in the market with just a graph. But for now, we're going to keep referring both to the graph and the table at the same. ,, , Produced by OCE, Atlas Digital Media at the University of Illinois, Urbana-Champaign.