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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.
In most circumstances the demand curve has a negative slope, and therefore slopes downwards. This is due to the law of demand which conditions that there is an inverse relationship between price and the demand of commodity (good or a service). As price goes up quantity demanded reduces and as price reduces quantity demanded increases.
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 demand curve facing a particular firm is called the residual demand curve. The residual demand curve is the market demand that is not met by other firms in the industry at a given price. The residual demand curve is the market demand curve D(p), minus the supply of other organizations, So(p): Dr(p) = D(p) - So(p) [14]
A Giffen good is a product that is in greater demand when the price increases, which are also special cases of inferior goods. [5] In the extreme case of income inferiority, the size of income effect overpowers the size of the substitution effect, leading to a positive overall change in demand responding to an increase in the price.
These inherited properties are not sufficient to guarantee that the excess demand curve is downward-sloping, as is usually assumed. The uniqueness of the equilibrium point is also not guaranteed. There may be more than one price vector at which the excess demand function is zero, which is the standard definition of equilibrium in this context. [14]
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A supply is a good or service that producers are willing to provide. The law of supply determines the quantity of supply at a given price. [5]The law of supply and demand states that, for a given product, if the quantity demanded exceeds the quantity supplied, then the price increases, which decreases the demand (law of demand) and increases the supply (law of supply)—and vice versa—until ...