Private Consumption – Supply/Demand

Private Consumption
Name of Student
Name of Institution
Private Consumption – Supply / Demand
Maghrabi, Chung and Cha (1991) define private consumption, also referred to as household consumption, as the measure of the value of the goods and services that a particular household buys and consumes.
Item 1: Honey Nut Cheerios (Breakfast cereals)
Price

Quantity Bought

3.64 US Dollars

One (1) Kg Packet

8.00 US Dollars

Half Kg Packet

3.00 US Dollars

One (1) Kg Packet



Item 2: Active Footwear Shoes
Price

Quantity Bought

100 US Dollars

One (1) Pair

200 US Dollars

Zero

50 US Dollars

Two (2) Pairs

Item 3: iPhone 8 Plus
Price

Quantity Bought

299 Us Dollars

One (1) phone

598 US Dollars

Zero (0) phones

149.5 US Dollars

Two(2) phones

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?
The law of demand says that in a free market economy, holding all other factors constant, there is usually an indirect relationship between price and demand of a good or service. A higher price leads to lower demand and vice-versa. An increase in the prices of goods or services erodes the purchasing power of a consumer and consequently lowering the consumer’s ability and willingness to buy. On the contrary, a drop in prices increases the purchasing power and the ability, willingness and quantities bought.
When the price of a good or service rise...