Answer to Question #127416 in Microeconomics for ishika

Question

how does very point on a demand curve reflect an equilibrium decision from a consumers point of view?

Answer 1

The demand curve is a graphical depiction of the relationship between the price of a good or service and the amount of it that consumers are willing and able to purchase at that given price and for a given period of time. The price normally appears on left vertical axis and the demanded quantity on the horizontal axis. A consumer’s demand is defined by his/her utility, purchasing power, and the capability to make a purchasing decision. The demand curve depicts various points on a graph where the price of an item aligns with demanded quantity.

Every point in the demand curve shows how much the equilibrium will change when the consumer is willing to pay some certain price for a commodity. When the prices are high, we expect that the consumer will not be willing to pay such amount of income for such a commodity and the equilibrium will be lower in the demand curve. Otherwise when the price of the commodity is relatively low, we expect that the willingness of the consumer to increase and there will be higher equilibrium level on the demand curve.