Demand Curve

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Definition: Demand Curve

It is the relationship between the price of goods and their demand in market.

In general, the curve shows an increasing demand for a good with the decreasing price. This might not follow linear relationship as there is some time gap between the actual increase in prices and the customer’s reactions to it.

Also, the curve does not remain same for different categories of products. For example: For irreplaceable goods like oil which is a necessity, even though the prices increase demand cannot decrease in the same fashion.

The demand curve is a very important concept in Economics. The understanding of the curve also comes in handy in areas like –

- Pricing (by comparing supply curve with demand curve)

- Understanding demand shifts due to economic conditions.

- Understanding the factors affecting demand.


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