Demand Curve

What this diagram shows

The demand curve shows the relationship between the price of a good and the quantity consumers are willing and able to buy at each price level, ceteris paribus (all other things being equal). It slopes downward from left to right because of the law of demand - as price falls, quantity demanded increases, and vice versa. This inverse relationship exists due to the income and substitution effects. Understanding demand curves is fundamental to analyzing market equilibrium and predicting how markets respond to changes.

Key points

• The demand curve slopes downward due to the law of demand - there's an inverse relationship between price and quantity demanded
• A movement along the curve occurs when price changes, while a shift of the entire curve happens when non-price factors change (income, tastes, substitute prices, etc.)
• The curve shows the maximum price consumers will pay for each quantity, or alternatively, the maximum quantity demanded at each price
• Individual demand curves can be added horizontally to create market demand curves
• The position and slope of the curve depends on factors like income levels, consumer preferences, and price elasticity of demand

Exam board notes

All major exam boards treat this diagram identically. However, AQA and Edexcel tend to place slightly more emphasis on drawing and interpreting shifts versus movements in their mark schemes compared to OCR.