Demand Curve

Demand Curve:

A line graph which relates the quantity demanded to a range of possible prices. The curve almost always slopes downwards to the right because, as prices fall, people tend to buy a larger quantity. This is known as a movement along the demand curve and leads to a change in the quantity demanded.

A shift in the demand curve will occur if tastes or incomes change or if there is a change in the price of a related good, either a substitute or a complement . This is often loosely referred to as a change in demand (as opposed to a movement along the demand curve). It is better to be clear and use the word ‘shift’.

As telephone calls have become cheaper, people are using the telephone more often.

Similarly, the falling price of mobile phones has increased the quantity demanded. These are movements along the demand curve.

Equally, rising incomes could mean that more people want to own mobile phones at all price levels. This means that the demand curve for mobile phones will shift to the right. It is often important to use the ceteris paribus assumption when analysing market changes. It allows us to deal with one change at a time and analyse its effect in isolation.

demand curve

Demand curve


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