Monday  August 12, 2024
 AmosWEB means Economics with a Touch of Whimsy!
 PEAK: The transition of a business cycle from an expansion and a contraction. The end of an expansions carries the descriptive term peak. At the peak, the economy has reached the highest level of production in recent times. The bad thing about a peak, however, is that it is a turning point, a turning point to a contraction. So even though a peak is the "highest" is not necessarily something we want. We would prefer never to reach the peak.

DEMAND CURVE:

A graphical representation of the relation between the demand price and quantity demanded, holding all ceteris paribus demand determinants constant. A demand curve graphically illustrates the law of demand, the inverse relation between demand price and quantity demanded for a particular good. It is one half of the standard market model; a supply curve is the other half.
A demand curve is a useful graph that can summarize several of the more important aspects of demand. It graphically illustrates the law of demand and when combined with the supply curve forms the market model, one of the most useful tools found in economic analysis.

### Plotting the Numbers

A demand curve is commonly derived from a simple demand schedule, such as the one for stuffed Yellow Tarantulas, a cute and cuddly stuffed creature from the Wacky Willy Stuffed Amigos line of collectibles, shown in the left half of the exhibit below. This schedule illustrates the law of demand relation between demand price and quantity demanded. As the demand price increases from \$5 to \$50, the quantity demanded decreases from 90 to 0 Yellow Tarantulas.
Demand ScheduleDemand Curve

Transferring the price-quantity pairs from the demand schedule to a graph reveals the demand curve for stuffed Yellow Tarantulas. This task is easily accomplished by clicking the [Plot] button. A \$5 price is associated with 90 stuffed animals; a \$10 price goes with 80 stuffed animals; and on it proceeds, until finally a \$50 price is paired with 0 stuffed animals.

The demand curve is finalized by connecting these 10 points with a continuous line. The 10 prices corresponding to these 10 points, are but 10 of an infinite number of prices, each with a corresponding quantity. A continuous line includes these other possibilities. To reveal this line, click the [Draw] button. The end result is the demand curve.

### What It All Means

A Demand Curve
Yellow Tarantulas
• First, as the price increases from a low of \$5 to a high of \$50, the quantity demanded of Yellow Tarantulas decreases from 90 to 0. Higher prices are related to smaller quantities. This relation, this inverse relation between demand price and quantity demanded, IS the basic law of demand.

• Second, the demand curve represents maximum values. That is, if the price is \$40, then the maximum quantity demanded is 20 Yellow Tarantulas. It is not 50, nor even 21, but only 20. Alternatively, if buyers buy 20 Yellow Tarantulas, then the maximum demand price they are willing and able to pay is \$40, not \$50, not even \$40.01, but \$40.

• Third, this whole curve, every price-quantity combination on the curve, is demand. Demand is the entire range of prices and quantities, all pairs. Demand is the entire curve. In contrast, quantity demanded is any specific number of Yellow Tarantulas buyers are willing and able to buy at a specific demand price. Selecting a different price generates a different quantity demanded. Quantity demanded is a point on the curve.

• Fourth, this demand curve represents hypothetical possibilities. It suggests a "What if" relation between demand price and quantity demanded. It indicates quantity demanded given a demand price, or demand price given the quantity demanded. If, for example, the demand price is \$10, then buyers are willing and able to buy 100 Yellow Tarantulas. This does not mean that buyers will buy, are buying, or ever will buy 100 Yellow Tarantulas. It only indicates what they would buy at a \$10 price.

 <= DEMAND AND SUPPLY INCREASE DEMAND DECREASE =>

Recommended Citation:

DEMAND CURVE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: August 12, 2024].

Check Out These Related Terms...

Or For A Little Background...

And For Further Study...
Search Again?

 RED AGGRESSERINE[What's This?] Today, you are likely to spend a great deal of time looking for the new strip mall out on the highway trying to buy either a rechargeable battery for your cell phone or a T-shirt commemorating the 2000 Olympics. Be on the lookout for deranged pelicans.Your Complete Scope
 Potato chips were invented in 1853 by a irritated chef repeatedly seeking to appease the hard to please Cornelius Vanderbilt who demanded french fried potatoes that were thinner and crisper than normal.
 "When one door closes another door opens; but we do often look so long and so regretfully upon the closed door, that we do not see the ones which open for us. "-- Alexander Graham Bell, inventor
 AFCAverage Fixed Cost
 Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

| | | | | | | | | | |
| | | |

Thanks for visiting AmosWEB