Economics – Reply to Peer’s Discussion Question W2Q1

I have to reply to 2 peer’s post. Please find the attachment of both peers reply. Please compose reply for both posts in the attached documents.Each response should be minimum of 200 words excluding reference. RequirementForums Guidelines CriteriaRequirementsQuality Guidelines (50%): Responses are original in content with a minimum of one external reference.All posts demonstrated analysis of the topic. Responses to classmates are significant and advanced the discussion.Participation Guidelines (30%):Responses to classmates are at least 200 words.Clarity, Organization & Professionalism Guidelines (20%): Responses were organized and logical.No spelling or grammatical errors.References were used and cited properly.Appropriate language, respect and consideration toward peers/instructor.
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Peer Response â?? 1
The law of demand is a fundamental rule which states that all other things equal, there is an
inverse relationship between price and quantity demanded (Brue, McConnell, & Flynn, 2014).
That is to say, as the price of a product increases, the quantity demanded will typically go down.
Conversely, as the price of a product decreases, the quantity demanded will typically go up. Our
textbook places significant emphasis on “all other things equal” when talking about the law of
demand. That is because there are many things that can influence demand of a product. For
example, income can vastly change the quantity demanded (Landsburg, 2012). Assume a car
costs $25,000 and the average household income is $25,000. Most people would not want to or
be qualified to spend a full years salary on a car. However, if the economy starts booming and
over the next few years the average household income doubles to $50,000, this would shift the
demand curve right, as the car is suddenly more affordable, even though the price did not
change.
The demand curve slopes downwards to better reflect the actual market conditions it
represents (Brue et al, 2014). As price falls (Y-axis), quantity demanded increases (X-axis). A
market demand curve is comprised of individual demand curves. Each individual has a quantity
they are willing to purchase at any given price. The some of the quantity demanded for each
individual creates the total market demand. These totals are then plotted on their own demand
curve, representing the market demand curve. Removing an individual can be quite impactful
to market demand. For example, let’s assume there are three buyers of a bakery’s fresh bread.
At $5 per loaf, John buys 5, Paul buys 4, and George buys 10, for a total market demand of
quantity 19. George recently finds out he has a gluten allergy, and stops buying bread. This
drops the total market demand from 19 to 9, a decrease of over 50%. Of course this example is
over simplified, but shows the impact an individual can have on total market demand.
Peer Response â?? 2
The Law of Demand, according to Bruce, McConnell, and Flynn (2014), is “other things being
equal, as prices falls, the quantity demanded rises, and as price rises, the quantity demanded
falls. In short, there is an inverse relationship between price and quantity demanded.” The
authors are very keen on noting that the other-things-equal is very judgemental where they are
concerned. They note that there are other factors to consider when discussing the Law of
Demand. Factors such as substitute items, common sense of the consumer and/or seller, and
observation.
An example of this, for me, would be the cost of eggs in the market. I love to bake, especially
cookies, brownies, etc (it is a stress reliever). But if the cost of eggs suddenly goes up and
continues to do so, I will rethink if I want to continue to bake cookies, brownies, or anything
else that requires eggs. I may decide to shift my baking to items that do not require eggs until
the cost of them return to what I deem reasonable. I could look at substitute items (such as
EggBeaters) to see if they would be comparable but may not give me the desired outcome of
the baked good I come to expect and demand. Additionally, I could look at local resources

(local farm stands or those individuals who have chickens and sell their eggs on the side) to see
if they are more reasonably priced. In time, if others follow suit then quantity demanded will
decrease due to the price increase. Then if the price of eggs start to decline, it follows that
quantity demanded will likely increase.
The slope of the Demand Curve is a downward one as it “reflects the law of demand: People
buy more of a product, service, or resource as its price falls. They buy less as its price rises”
(Bruce, et al 2014). In other words, when prices fall, the quantity demanded of a product (or
service) rises. If prices rise, then the quantity demanded of a product (or service) falls. Price is
usually shown on the left vertical side of a graph, and the quantity demanded on the horizontal
bottom. As one moves upward along the Price side (increase), then moves from left to right
(increase) on the Quantity Demanded horizontal line, the points where the price and demanded
quantity intersect will ultimately create a downward slope when the points are
connected. Thus showing us that: fall in price = increase in quantity demanded or reversing it
to: increase in price = decrease in quantity demanded.
Finally, the market demand curve is the adding together of all the individual demand curves in
the market for a particular good or service and shows the quantity demanded at varying price
points. Also, because quantity demanded decreases as price increases, the market demand
curve will be portrayed as a downward (or negative) slope. Lastly, the market demand curve
allows businesses (firms, organizations) the ability to determine the entire market demand at
any given price point.

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