The Demand Curve

The demand curve shows the concept of quantity demanded in a graphical way. The demand curve can be drawn for many other purposes too, but in this blog we shall see for quantity demanded only. It is a straight line that starts high (where the price is high) and goes down (where the price gets lower). That's because when the price is high, the quantity is demanded lower. The opposite of it is also true. When the price gets lower, people want to buy in more quantity as they find it a better deal. So the price and quantity have an inverse relationship, and the slope of this curve is typically downwards.

Let's assume this market of seaweed (a famous savoury) below-

Price in Dollar (P)	Quantity Demanded (Q)
10	10
20	8
30	6
40	4
50	2

The demand curve of it will look like this-

Here, at a price of $10, consumers are willing to purchase 10 units of seaweed, but when the price increases to $20, the quantity demanded decreases to 8 units. As the price continues to increase to $30, the quantity demanded further decreases to 6 units, and so on.

This relationship between price and quantity demanded is also known as the law of demand. As the price of a product increases, the quantity demanded by consumers will decrease, all else being equal. Conversely, the decreasing prices will typically increase the quantity demanded.

One thing you'll need to consider. When saying everything else is equal, this means some factors such as consumer incomes, tastes and preferences, availability of substitutes, and other market conditions are remaining constant. We will see how these things change the quantity demanded in future too.

By holding these variables constant, we can isolate the effect of changes in price on the quantity demanded of the product for a basic understanding of the concept, allowing us to observe only the inverse relationship between price and quantity demanded, as shown in the demand curve.