The demandcurve is the graphical representation of the negativerelationship between the price of a good or service the quantity of it that is demanded.
This relationship is described by the law of demand (2.1.1).
Since higher prices lead to less quantity demanded (negative relationship), the demand curve is downward-slopping (Figure 1).
Figure 1: demand curve ($D$)
The figure above showcases a demand curve that is downward-sloping due to the law of demand:
For a price of $2$, consumers are willing and able to buy $50$ units of the good (it is cheap and has a lot of utility!).
However, as the price rises to $3,4$ and $5$, the quantity demanded by consumers decreases to $40, 30$ and $20$ respectively. This is because of (2.1.1):
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Questions
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Question 1
Recap question
Which statement best describes what a demand curve represents?
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Note
A demand curve is a graphical representation that shows the relationship between the price of a good or service and the quantity demanded by consumers. It illustrates how much of a product people are willing to buy at different price levels.
The demand curve is a fundamental tool in economics that helps us understand consumer behavior.
It is typically drawn with price on the vertical axis (y-axis) and quantity demanded on the horizontal axis (x-axis).
The curve usually slopes downward from left to right, indicating that as price decreases, quantity demanded increases.
The demand curve helps businesses and policymakers predict how changes in price might affect consumer purchasing decisions.
DefinitionDemand CurveA graphical representation showing the relationship between the price of a good and the quantity demanded by consumers.
AnalogyThink of the demand curve like a shopping list where the cheaper the item, the more you're willing to buy. If apples are €1 each, you might buy 5, but if they're €0.50 each, you might buy 10.
