IBonomicsDemand CurveSL
MicroeconomicsA basic diagram showing the inverse relationship between price and quantity demanded, illustrating the law of demand.
Curves and elements
- demand
- Demand Curve (D): Shows the inverse relationship between price and quantity demanded. Slopes downward from left to right.
- price change
- Price Change: A fall in price from P1 to P2 causes movement along the demand curve.
- quantity change
- Quantity Change: Quantity demanded increases from Q1 to Q2 as price decreases.
Key explanations
- 1
The demand curve slopes downward from left to right, showing that consumers demand more of a good at lower prices.
- 2
When price falls from P1 to P2, quantity demanded increases from Q1 to Q2.
- 3
This movement along the demand curve is caused by a change in price, not a shift in demand.
- 4
The inverse relationship between price and quantity demanded is known as the law of demand.
Example exam question
Explain how a fall in the price of a good affects quantity demanded, using a demand curve diagram.
Show example answer
A fall in price from P1 to P2 causes an extension in demand, increasing quantity demanded from Q1 to Q2, all things being equal.
