Editing Demand curve (section)

{{Short description|Graph of how much of something a consumer would buy at a certain price}}
[[File:Supply-and-demand.svg|thumb|right|An example of a demand curve shifting. ''D''1 and ''D2'' are alternative positions of the demand curve, ''S'' is the supply curve, and ''P'' and ''Q'' are price and quantity respectively. The shift from D1 to D2 means an increase in demand with consequences for the other variables]]
A '''demand curve''' is a [[graph of a function|graph]] depicting the [[inverse demand function]],<ref>{{cite web |last1=Karaivanov |first1=Alexander |title=The demand function and the demand curve |url=https://www.sfu.ca/~akaraiva/demfun.pdf |website=sfu.ca |publisher=[[Simon Fraser University]] |access-date=29 August 2023}}</ref> a relationship between the price of a certain [[commodity]] (the ''y''-axis) and 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 all consumers in a particular market (a '''market demand curve''').

It is generally assumed that demand curves slope down, as shown in the adjacent image. This is because of the [[law of demand]]: for most goods, the quantity demanded falls if the price rises.<ref name="krugman et al.">{{cite book |last1=Krugman |first1=Paul |author1-link=Paul Krugman |last2=Wells |first2=Robin |last3=Graddy |first3=Kathryn |title=Economics: European Edition |publisher=Palgrave Macmillan |year=2007 |isbn=978-0-7167-9956-6 |url=https://books.google.com/books?id=JgGyX4ocbjcC }}</ref> Certain unusual situations do not follow this law. These include [[Veblen goods]], [[Giffen goods]], and speculative bubbles where buyers are attracted to a commodity if its price rises.  

Demand curves are used to estimate behaviour in [[Perfect competition|competitive markets]] and are often combined with [[supply curve]]s 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 known as [[market clearing]] price) and the equilibrium quantity (the amount of that good or service that will be produced and bought without surplus/excess supply or shortage/excess demand) of that market.<ref name="krugman et al."/>{{rp|57}}  

Movement [[#Movement along a demand curve|"along the demand curve"]] refers to how the quantity demanded changes when the price changes. 

'''Shift of the demand curve''' [[#Shift of a demand curve|as a whole]] occurs when a factor other than price causes the price curve itself to [[translation (geometry)|translate]] along the x-axis; this may be associated with an advertising campaign or perceived change in the quality of the good.<ref>{{cite web|url=https://www.geektonight.com/demand-curve-shifts/|title=Demand Curve Shifts|date=17 January 2021 }}</ref>

Demand curves are estimated by a variety of techniques.<ref>{{cite web|url=https://www.economicsdiscussion.net/demand/empirical-estimation-of-demand-top-10-techniques/19772|title=Empirical Estimation of Demand: Top 10 Techniques|access-date=11 December 2020|author=Samia Rekhi|work=economicsdiscussion.net|date=16 May 2016 }}</ref> The usual method is to collect data on past prices, quantities, and variables such as consumer income and product quality that affect demand and apply statistical methods, variants on multiple regression. The issue with this approach, as outlined by Baumol, is that only one point on a demand curve can ever be observed at a specific time. Demand curves exist for a certain period of time and within a certain location, and so, rather than charting a single demand curve, this method charts a  series of positions within a series of demand curves.<ref>{{cite book | url=https://archive.org/details/economictheoryop0000baum_l5p9 | isbn=978-0-13-227132-5 | title=Economic theory and operations analysis | date=1977 | last1=Baumol | first1=William J. | publisher=Prentice-Hall }}</ref> Consumer surveys and experiments are alternative sources of data. For the shapes of a variety of goods' demand curves, see the article [[Price elasticity of demand#Selected price elasticities|price elasticity of demand]].