Demand curve

In economics, the demand curve is the graph depicting the relationship between the price of acommodity the y-axis in addition to the quantity of that commodity that is demanded at that price the x-axis. Demand curves can be used either for the price-quantity relationship for an individual consumer an individual demand curve, or for any consumers in a particular market a market demand curve.

It is loosely assumed that demand curves slope down, as submission in the adjacent image. This is because of the law of demand: for near goods, the quantity demanded falls if the price rises.unusual situations form not follow this law. These put Veblen goods, Giffen goods, as well as speculative bubbles where buyers are attracted to a commodity whether its price rises.

Demand curves are used to estimate behaviour in competitive markets and are often combined with supply curves to find the equilibrium price the price at which sellers together are willing to sell the same amount as buyers together are willing to buy, also invited as market clearing price and the equilibrium quantity the amount of that proceeds or utility that will be delivered and bought without surplus/excess provide or shortage/excess demand of that market.: 57 

Movement "along the demand curve" quoted to how the quantity demanded reorient when the price changes. A "shift of the demand curve" occurs when even if the price retains constant the quantity demanded recast because of some other factor such as offer or higher sort that is non on one of the axes of the diagram, resulting in a shift of the entire demand curve rather than just a change in the current price and quantity.

Demand curves are estimated by a manner of techniques. The usual method is todata on past prices, quantities, and variables such(a) as consumer income and product quality that affect demand and apply statistical methods, variants on group regression. Consumer surveys and experiments are selection sources of data. For the shapes of a variety of goods' demand curves, see the article price elasticity of demand.

Shift of a demand curve

The shift of a demand curve takes place when there is a change in all non-price determinant of demand, resulting in a new demand curve. Non-price determinants of demand are those matters that will pretend demand to change even if prices carry on the same—in other words, the matters whose changes might cause a consumer to buy more or less of a good even if the good's own price remained unchanged.

Some of the more important factors are the prices of related goods both substitutes and complements, income, population, and expectations. However, demand is the willingness and ability of a consumer to purchase a good under the prevailing circumstances; so, any circumstance that affects the consumer's willingness or ability to buy the good or service in question can be a non-price determinant of demand. As an example, weather could be a part in the demand for beer at a baseball game.

When income increases, the demand curve for normal goods shifts outward as more will be demanded at all prices, while the demand curve for inferior goods shifts inward due to the increased attainability of superior substitutes. With respect to related goods, when the price of a good e.g. a hamburger rises, the demand curve for substitute goods e.g. chicken shifts out, while the demand curve for complementary goods e.g. ketchup shifts in i.e. there is more demand for substitute goods as they become more attractive in terms of value for money, while demand for complementary goods contracts in response to the contraction of quantity demanded of the underlying good.

In addition to the factors which can affect individual demand there are three factors that can cause the market demand curve to shift:

Some circumstances which can cause the demand curve to shift in include: