Usefulness of the demand schedule

1. Producer – It helps the businessman understand the pattern of demand in the market and to anticipate the quantity and the quality of goods that he can sell at different prices.

2. Monopolist – In case of monopolies, price can be decreased so as to increase demand.

3. Government – Since tax and subsidy policy influences demand, if tax increases, price will increase resulting in a fall in demand, and a subsidy will reduce price and increase demand Hence the finance minister with the help of the demand schedule can frame taxes so as to bring revenue for the government without affecting production or distribution a tax on goods with a high market demand.

4. Economist – An economist can determine the standard of living in on the basis of if demand for luxuries is high standard of living is high. This helps him to estimate the level of economic development.

Demand curve is hypothetical.

Utility itself is hypothetical and imaginary. Based on utility the demand schedule is formed.. Hence the concept is hypothetical and imaginary in nature. Yet the demand law is important though the application of the law is only generally true.

Posted in General Economics