Search results
Results from the WOW.Com Content Network
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.
The demand curve, shown in blue, is sloping downwards from left to right because price and quantity demanded are inversely related. This relationship is contingent on certain conditions remaining constant. The supply curve, shown in orange, intersects with the demand curve at price (Pe) = 80 and quantity (Qe)= 120.
Markets that face a downward sloping demand curve are said to have market power. This terms means that the markets have a certain power to decide their own price. [3] This does not mean that the firm can decide the quantity they wish to sell. The firm can decide the price and the quantity is determined by the demand curve.
For a PC company, this equilibrium condition occurs where the perfectly elastic demand curve equals minimum average cost. An MC company's demand curve is not flat but is downward-sloping. Thus, the demand curve will be tangential to the long-run average cost curve at a point to the left of its minimum. The result is excess capacity. [22]
According to the law of demand, the demand curve is always downward-sloping, meaning that as the price decreases, consumers will buy more of the good. Mathematically, a demand curve is represented by a demand function, giving the quantity demanded as a function of its price and as many other variables as desired to better explain quantity demanded.
The utility hypothesis tells us nothing about market demand unless it is augmented by additional requirements. [19] In other words, it cannot be assumed that the demand curve for a single market, let alone an entire economy, must be smoothly downward-sloping simply because the demand curves of individual consumers are downward-sloping.
Demand represents the amount of that thing that consumers want to buy. When more people want it and fewer people have it, the price goes up. When fewer people want it or more people start selling ...
Compared to meat, it is obvious that potatoes could be much cheaper as a staple food. Due to poverty, individuals could not afford meat anymore; therefore, demand for potatoes increased. Under such a situation, the supply curve will increase with the rise in potatoes’ price, which is consistent with the definition of Giffen good.