The demand schedule is generally represented by a table, which shows how the quantity demanded of a good varies with price, other things remaining constant. Table shows a hypothetical demand schedule for jackets sold per month at Mahendranagar.
Table is constructed, based on the implicit assumption that the number of jackets demanded solely depends on their respective prices. Plotting the above figures in a graph, we can derive the demand curve. The graphical representation of the demand schedule is the demand curve, as shown in figure.
The graph shows that the demand curve is downward sloping. A change in the quantity demanded is a movement along the demand curve caused by a change in the price of the good. A decrease in the price is reflected by a corresponding increase in the amount of quantity demanded. This inverse relationship between price and the quantity demanded is depicted in the shape of the demand curve. The downward slope of the demand curve reflects the law of demand, which states that other things remaining the same, if the price of any good decreases its quantity demanded increases and vice versa.
There are however some instances where the law of demand does not hold goods. These are given below:
Firstly, if the concerned good is a Giffen good the rational consumer will go on decreasing his consumption of the good as the price falls. This is because a Giffen good is such that the consumer purchases less and less of the good as its price falls and vice versa. It was noticed by Giffen that when the prices of bread increases, consumers curtailed their consumption of meat and other expensive items and consumed more bread.
Secondly, a consumer may judge a good by its price. This behavior of the consumer is known as veblem effect due to a change in price. Thus, when a price hike takes place for a good the consumer may be misguided to think that a quality improvement has taken place and he consumes more of the product.
Thirdly, it so happens that when the price of a good is on a rise the consumer it to rise further. In such a case he may purchase more and more units of a good as its price goes on increasing.
Fourthly, in the share market it is noted that when the price of a particular share raises its demand also increases to some people and vise versa.
In all the above cases it could be noted that the demand curve is upward rising instead of being downward slopping. This implies that, due to one unit increase in the price, the quantity demanded also increases by some amount, and vice versa.