Demand Curves in Economics

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Economics Dictionary

• Economics Dictionary is an online blog website
  that provides a detailed analysis of various
  aspects of economics. Learn more about the terms,
  theories, history, and current scenario of
  economics.

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Demand Curves in Economics

• The demand curve is used to determine the
  relationship between the price of goods and
  services and the quantity demanded. When we try
  to go by the bookish language, it can be a little
  intimidating and hard to understand some of the
  basic concepts of Economics. So, here, let us try
  to simplify the explanation of the demand curve
  so that it can be a fun learning experience for
  you.

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Meaning of Demand Curves in Economics

• In Economics, the demand curve is represented
  with the help of line graphs. It is a way to show
  the relationship between the quantity of the
  purchased goods and services and their prices.
  While demonstrating this relationship with a line
  graph, you may mark the prices of goods and
  services on the vertical (Y) axis, and the
  quantity of the purchased goods should be marked
  horizontally on the (X) axis. The whole purpose
  of drawing and explaining a demand curve as a
  concept of Economics is to analyze the
  relationship between price and quantity to
  determine the Law of Demand. Before we dwell
  further into the details, let us tell you what is
  the meaning of the Law of Demand. This law states
  that the quantity demanded will have an inverse
  relationship with the price of the goods. This
  means, when the prices go high, the quantity
  demanded will decrease.

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How To Draw A Demand Curve

• Drawing a demand curve comes in certain steps.
  These steps are to be followed using the
  information provided to you in the form of a
  demand schedule. The demand schedule shows how
  many units of a commodity, good, or service will
  be purchased at various price points. Once you
  take cues from the demand schedule, you can be
  certain to know how the demand curve will be
  drawn. To explain this better, let us give you an
  example.
• Below is the demand schedule for cotton

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• If the price were to change from P 6 to P
  4, it would cause a movement along the demand
  curve, as the new quantity demanded would be 3000.

So, this was all about the demand curve and its
corresponding concepts. Well, there are also
some exceptions to the demand curve that you must
know.
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Exceptions to the Demand Curve

• Just as every relationship in the world has
  certain exceptions to it, the demand curve too
  has its own set of exceptions.
• Giffen Goods Giffen Goods are the staple food
  items like rice and bread which do not have any
  substitutes available, so the price of these
  goods does not affect the demand negatively. When
  the price goes up, their demand goes up, and when
  the price goes low, their demand goes low.
• Essential Goods Certain goods and commodities
  that are essential will not have an impact from
  the increasing or decreasing prices. For example,
  medicines. No matter the pricing variations, if
  one needs to buy medicines they will do so
  irrespective of the price fluctuations. So, in
  this case, the essential goods become an
  exception to the demand curve.
• Luxury Goods Goods and services that belong to
  the category of luxury items are another
  exception to the law of demand. These goods are
  mainly purchased by wealthy consumers who would
  buy such goods only if they have a high price.
  For a wealthy chunk of consumers, higher prices
  indicate higher prestige, social status, and
  value.