Question

What is the equilibrium demand schedule? Why do we need to use two demand curves to...

What is the equilibrium demand schedule?

Why do we need to use two demand curves to represent consumers suffering an addicition?

Please explain.

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Answer #1

The equilibrium demand schedule shows the equilibrium quantities at the corresponding to various equiibrium price levels. The different equilibrium situations may arise due to change in any factor of the demand.

The two demand curves will depict different elasticities of demand. If the consumer is too much habitual the demand curve will be inelastic showing that the percentage change in quantity demanded is less than the percentage change in the price of the good. While if the consumer is not much habituated and has other alternatives of that good, his demand curve will be elastic. For example youth smoking is considered more elastic than adult smoking.

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