Macroeconomics

‭Demand curve:‬

‭We‬ ‭can‬ ‭deduce‬ ‭from‬ ‭the‬ ‭demand‬ ‭schedule‬ ‭and/or‬ ‭curve,‬ ‭that‬ ‭when‬ ‭the‬ ‭price‬ ‭is‬ ‭$80‬ ‭per‬ ‭tablet,‬ ‭the‬ ‭quantity‬‭demanded‬‭is‬‭700‬‭units;‬‭at‬‭a‬‭price‬‭of‬‭$100,‬‭the‬‭quantity‬‭demanded‬‭drops‬‭to‬‭600‬‭units,‬‭and‬‭so‬ ‭on.‬ ‭The Law of Demand and the Slope of the Demand Curve‬ ‭An‬‭important‬‭principle‬‭illustrated‬‭by‬‭the‬‭demand‬‭curve‬‭is‬‭the‬ ‭Law‬‭of‬‭Demand‬ ‭.‬‭This‬‭law‬‭implies‬‭that,‬‭in‬ ‭general,‬ ‭as‬‭the‬‭price‬‭of‬‭a‬‭product‬‭increases,‬‭the‬‭quantity‬‭demanded‬‭tends‬‭to‬‭decrease‬ ‭.‬‭This‬‭inverse‬ ‭or‬ ‭indirect‬ ‭relationship‬ ‭between‬ ‭price‬ ‭and‬ ‭quantity‬ ‭demanded‬ ‭is‬ ‭a‬ ‭key‬ ‭factor‬ ‭in‬ ‭understanding‬ ‭how‬ ‭consumer‬‭behavior‬‭impacts‬‭the‬‭market.‬‭The‬‭graph‬‭helps‬‭us‬‭visualize‬‭how‬‭changes‬‭in‬‭price‬‭influence‬‭the‬ ‭willingness‬ ‭of‬ ‭consumers‬ ‭to‬ ‭buy‬ ‭a‬ ‭particular‬ ‭product‬ ‭or‬ ‭service.‬ ‭For‬ ‭example,‬ ‭based‬ ‭on‬ ‭the‬ ‭previous‬ ‭demand‬ ‭curve‬ ‭of‬ ‭tablets,‬ ‭we‬ ‭can‬ ‭deduce‬ ‭that‬ ‭consumers‬ ‭are‬ ‭more‬ ‭willing‬ ‭and‬ ‭able‬ ‭to‬ ‭buy‬ ‭tablets‬‭at‬ ‭lower prices.‬ ‭The‬ ‭demand‬ ‭curve,‬ ‭as‬ ‭illustrated‬ ‭in‬ ‭the‬ ‭previous‬ ‭example,‬ ‭slopes‬ ‭downward‬ ‭from‬ ‭left‬ ‭to‬ ‭right.‬ ‭This‬ ‭means‬ ‭that‬ ‭as‬ ‭you‬ ‭move‬ ‭from‬ ‭left‬ ‭to‬ ‭right‬ ‭along‬ ‭the‬ ‭curve,‬ ‭the‬ ‭price‬ ‭decreases.‬‭A‬‭downward-sloping‬ ‭curve‬ ‭in‬ ‭economics‬ ‭indicates‬ ‭that‬ ‭there‬ ‭is‬ ‭an‬ ‭inverse/negative/indirect‬ ‭relationship‬ ‭between‬ ‭the‬ ‭two‬ ‭variables plotted on the axes, meaning that when one increases, the other decreases, and vice versa.‬ ‭Movements Along vs. Shifts of the Demand Curve‬ ‭When‬ ‭analyzing‬ ‭demand,‬ ‭it‬ ‭is‬ ‭crucial‬ ‭to‬ ‭differentiate‬ ‭between‬ ‭the‬‭effects‬‭of‬‭a‬‭change‬‭in‬‭price‬‭and‬‭the‬ ‭effects of a change in other demand determinants on the demand curve.‬

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