Demand curve is a graphic representation of the demand schedule and performance. Demand curve is drafted on the Production Possibility Frontier (PPF) with price on the vertical axis and quantity on the horizontal axis. The demand curve normally slopes downward from left to right. In doing so, the demand curve reflects incremental changes of higher quantity demanded at lower prices. Frequently, the demand curve interacts with a supply curve on the Production Possibility Frontier, depicting the relationship between market supply and market demand. When demand curve and supply curve cross, the market price is said to be at equilibrium. Economists often make use of the demand curve to calculate and project the demand and pricing for capital goods, services, labor, as well as many other economic variables. |
