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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.
A change in demand is indicated by a shift in the demand curve. Quantity demanded, on the other hand refers to a specific point on the demand curve which corresponds to a specific price. A change in quantity demanded therefore refers to a movement along the existing demand curve. However, there are some exceptions to the law of demand.
Price discrimination may improve consumer surplus. When a firm price discriminates, it will sell up to the point where marginal cost meets the demand curve. Some conditions are required for price discrimination to exist: Firms must face a downward-sloping demand curve, i.e. the demand for a product is inversely proportional to its price.
When fewer people want it or more people start selling it, the price goes down. There are two forces at work: The law of supply: If everything else remains the same, demand drops when prices rise ...
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]
A good may be a Giffen good at the individual level but not at the aggregate level (or vice-versa). As shown by Hildenbrand's model, aggregate demand will not necessarily exhibit any Giffen behavior even when we assume the same preferences for each consumer, whose nominal wealth is uniformly distributed on an interval containing zero.
A common and specific example is the supply-and-demand graph shown at right. This graph shows supply and demand as opposing curves, and the intersection between those curves determines the equilibrium price. An alteration of either supply or demand is shown by displacing the curve to either the left (a decrease in quantity demanded or supplied ...
Here’s why the Fed’s most recent rate cut won’t fix the US housing problem and homebuyers likely face a tough year ahead — plus a few alternative ways to invest in high-demand real estate