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

Price is inversely related to the quantity purchased for apples and chocolate, but the quantity purchased for milk remains the same irrespective of price change.

This shows that milk is a necessity as we continue to purchase the same quantity of milk even if the price goes up.