In microeconomics , the demand curve is the graph that represents the relationship between the price of a given good or service and the level or quantity of demand that consumers accept.
In neoclassical economic theory, the demand curve is one of the tools to study the effect of prices. It is represented from a graph where the relationship between demand level and prices is collected, this being decreasing since the relationship is inverse. This characteristic (negative slope) is included in the famous law of demand.
With exception, yes, that the competition is perfect. Since when the competition is perfect, the demand curve is horizontal. However, it is important to indicate that perfect competition situations tend to focus on theoretical frameworks. See perfect competition
Thus, a demand equation that is:
Qd = 190-2P
It indicates that as the price increases, consumers will want a smaller amount.
From this relationship we can also obtain elasticities , which indicate in what proportion the demand varies when there is an increase or decrease movement) in the price of a unit. We can thus study the impact on consumers of price changes.
The same curve also includes the supply curve, which establishes the direct relationship between price and supply level, which is increasing due to the direct relationship between prices and supply level.
From the intersection of both, the equilibrium price arises, which is the one that determines the price from which an ideal stability situation occurs without surpluses, from which the entire supply of producers is acquired by the plaintiffs.
Shifts in the demand curve
Demand is not static, and does not remain unchanged over time, but varies depending on some factors external to the equation. Consequently, shifts in the demand curve may occur depending on other changes of other related factors. Graphically indicates in a static way the level of demand that is obtained for each price.
However, the displacements may be due to different circumstances, resulting in a new equilibrium price and a new graphic curve that assume different levels of demand for the same price. Shifts in the demand curve may be due to:
- Increases in the number of claimants of the good.
- Changes in future price prospects.
- Changes in consumer tastes.
- The increase in income in consumers.
- Changes in the prices of substitute goods.