demand curve

(noun)

The graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price.

Related Terms

Examples of demand curve in the following topics:

  • Demand Schedules and Demand Curves

    • A demand curve depicts the price and quantity combinations listed in a demand schedule.
    • The curve can be derived from a demand schedule, which is essentially a table view of the price and quantity pairings that comprise the demand curve.
    • The demand curve of an individual agent can be combined with that of other economic agents to depict a market or aggregate demand curve.
    • In this manner, the demand curve for all consumers together follows from the demand curve of every individual consumer.
    • The demand curve in combination with the supply curve provides the market clearing or equilibrium price and quantity relationship.

  • Shifts in the Money Demand Curve

    • A shift in the money demand curve occurs when there is a change in any non-price determinant of demand, resulting in a new demand curve.
    • A demand curve is used to graph and analyze the demand for money.
    • The shift of the money demand curve occurs when there is a change in any non-price determinant of demand, resulting in a new demand curve.
    • A decrease in demand would shift the curve to the left.
    • Explain factors that cause shifts in the money demand curve, Explain the implications of shifts in the money demand curve

  • The Demand Curve in Perfect Competition

    • The demand curve for an individual firm is thus equal to the equilibrium price of the market .
    • The demand curve for a firm in a perfectly competitive market varies significantly from that of the entire market.The market demand curve slopes downward, while the perfectly competitive firm's demand curve is a horizontal line equal to the equilibrium price of the entire market.
    • The horizontal demand curve indicates that the elasticity of demand for the good is perfectly elastic.
    • The demand curve for an individual firm is equal to the equilibrium price of the market.
    • The market demand curve is downward-sloping.

  • Changes in Demand and Shifts in the Demand Curve

    • Demand curves in combination with supply curves, which depict the price to quantity relationship of producers, are a representation of the goods and services market.
    • Movements in demand are specific to either movements along a given demand curve or shifts of the entire demand curve.
    • The demand curve for a good will shift in parallel with a shift in the demand for a complement.
    • A demand curve provides an economic agent's price to quantity relationship related to a specific good or service.
    • Distinguish between shifts in the demand curve and movement along the demand curve

  • Market Demand

    • The demand schedule is depicted graphically as the demand curve.
    • The demand curve is shaped by the law of demand.
    • The graphical representation of a market demand schedule is called the market demand curve.
    • As noted, both individual demand curves and market demand are typically expressed as downward shaping curves.
    • The demand curve is the graphical depiction of the demand schedule.

  • Demand for Public Goods

    • The aggregate demand curve for a public good is the vertical summation of individual demand curves.
    • The economy's marginal benefit curve (demand curve) for a public good is thus the vertical sum all individual's marginal benefit curves.
    • This is in contrast to the aggregate demand curve for a private good, which is the horizontal sum of the individual demand curves at each price.
    • The sum of the individual marginal benefit curves (MB) represent the aggregate willingness to pay or aggregate demand (∑MB).
    • The intersection of the aggregate demand and the marginal cost curve (MC) determines the amount of the good provided.

  • Optimal Quantity of a Public Good

    • Unlike the market demand curve for private goods, where individual demand curves are summed horizontally, individual demand curves for public goods are summed vertically to get the market demand curve.
    • As a result, the market demand curve for public goods gives the price society is willing to pay for a given quantity.
    • Due to the law of diminishing marginal utility, the demand curve is downward sloping.
    • The supply curve for a public good is equal to its marginal cost curve.
    • As already noted, the demand curve is equal to the marginal benefit curve, while the supply curve is equal to the marginal cost curve.

  • Impact of Changing Price on Producer Surplus

    • Shifts in the demand curve are directly related to the amount of producer surplus.
    • If demand decreases, and the demand curve shifts to the left, producer surplus decreases.
    • Conversely, if demand increases, and the demand curve shifts to the right, producer surplus increases.
    • At an initial demand represented by the "Demand (1)" curve, producer surplus is the blue triangle made of $P_1$, $A$, and $B$.
    • When demand increases, represented by the "Demand (2)" curve, producer surplus is the larger gray triangle made of $P_2$, $A$, and $C$.

  • Interpretations of Price Elasticity of Demand

    • Since PED is measured based on percent changes in price, the nominal price and quantity mean that demand curves have different elasticities at different points along the curve.
    • In this case the PED value is the same at every point of the demand curve.
    • The PED value is the same at every point of the demand curve.
    • The price elasticity of demand for a good has different values at different points on the demand curve.
    • Describe the relationship between price elasticity and the shape of the demand curve.

  • The Relationship Between the Phillips Curve and AD-AD

    • Changes in aggregate demand cause movements along the Phillips curve, all other variables held constant.
    • The Phillips curve and aggregate demand share similar components.
    • Let's assume that aggregate supply, AS, is stationary, and that aggregate demand starts with the curve, AD1.
    • Now, imagine there are increases in aggregate demand, causing the curve to shift right to curves AD2 through AD4.
    • This illustrates an important point: changes in aggregate demand cause movements along the Phillips curve.