Graph of how much of something a consumer would buy at a certain price
An example of a demand curve shifting. D1 and D2 are alternative positions of the demand curve, S is the supply curve, and P and Q are price and quantity respectively. The shift from D1 to D2 means an increase in demand with consequences for the other variables
A demand curve is a graph depicting the inverse demand function,[1] a relationship between the price of a certain commodity (the y-axis) and the quantity of that commodity that is demanded at that price (the x-axis). Demand curves can be used either for the price-quantity relationship for an individual consumer (an individual demand curve), or for all consumers in a particular market (a market demand curve).
It is generally assumed that demand curves slope down, as shown in the adjacent image. This is because of the law of demand: for most goods, the quantity demanded falls if the price rises.[2] Certain unusual situations do not follow this law. These include Veblen goods, Giffen goods, and speculative bubbles where buyers are attracted to a commodity if its price rises.
Demand curves are used to estimate behaviour in competitive markets and are often combined with supply curves to find the equilibrium price (the price at which sellers together are willing to sell the same amount as buyers together are willing to buy, also known as market clearing price) and the equilibrium quantity (the amount of that good or service that will be produced and bought without surplus/excess supply or shortage/excess demand) of that market.[2]: 57
Movement "along the demand curve" refers to how the quantity demanded changes when the price changes.
Shift of the demand curve as a whole occurs when a factor other than price causes the price curve itself to translate along the x-axis; this may be associated with an advertising campaign or perceived change in the quality of the good.[3]
Demand curves are estimated by a variety of techniques.[4] The usual method is to collect data on past prices, quantities, and variables such as consumer income and product quality that affect demand and apply statistical methods, variants on multiple regression. Consumer surveys and experiments are alternative sources of data. For the shapes of a variety of goods' demand curves, see the article price elasticity of demand.
^Karaivanov, Alexander. "The demand function and the demand curve" (PDF). sfu.ca. Simon Fraser University. Retrieved 29 August 2023.
^ abKrugman, Paul; Wells, Robin; Graddy, Kathryn (2007). Economics: European Edition. Palgrave Macmillan. ISBN 978-0-7167-9956-6.
^"Demand Curve Shifts". 17 January 2021.
^Samia Rekhi (16 May 2016). "Empirical Estimation of Demand: Top 10 Techniques". economicsdiscussion.net. Retrieved 11 December 2020.
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