The Demand Curve

The demand curve shows how the quantity demanded of a good changes as its price changes, holding all else constant. At price \(P_0\), consumers demand quantity \(Q_0\). The dashed lines from the point to each axis show how to read off the price and quantity coordinates.

The curve slopes downward because of the law of demand: as price falls, quantity demanded rises. This reflects both a substitution effect (the good becomes relatively cheaper, so consumers buy more of it) and an income effect (a lower price effectively increases purchasing power). Move the point along the curve to explore different price and quantity combinations, or adjust the steepness and position to see how the curve changes.