Demand Schedule 2020-05-25 08:00:00

Demand Schedule

A demand schedule allows for efficient price discovery of a product or service. It plots a curve with the Y-axis representing price and the X-axis representing quantity. A table can also be used to display this data.

To understand how this works, let’s say ABC sells widgetX for $5 and widgetY for $6.50. The company is currently generating a profit. With strong demand, ABC decides to increase its prices from $5 to $7 and $6.50 to $10. It finds that customers buy far fewer products at those prices, which decreases the company’s profits. Prices need to come down, so ABC changes them from $7 to $6 and $10 to $8. With the adjusted prices, demand comes back, and so do profits. At this point, supply and demand are equal. This is called the equilibrium price. Now ABC has data that represents what happens at different price points.

 


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