Te demand curve
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The demand function represents buyers' behavior.
Prices influence consumers' purchase decisions. The demand function can be depicted as a negatively sloped demand curve.
- If all other factors are equal, as the price of a good rises, consumer demand falls. This is mainly due to the availability of substitutes, which are goods that perform similar functions.
- As the price of a good falls, consumer demand rises.
Therefore, there is an inverse
relationship between the price of a good and the amount that consumers are willing to buy. The demand curve
normally slopes downward
. It tells the analyst the quantity that consumers are willing to buy for each possible price when all other influences on consumers' planned purchases remain the same.
Refer to the graph below. What is the quantity of cassettes demanded when their price is $4.00 per week?
Answer: Two cassettes per week. The demand curve tells how much is demanded at each price. To determine the quantity demanded, find $4.00 on the vertical axis and read across until you meet the demand curve. Then read the quantity from the horizontal axis.