What does a demand curve illustrate?

A demand curve illustrates the graphical representation of the relationship between the price of a good and the quantity demanded. This curve typically slopes downward from left to right, indicating that as the price of a good decreases, the quantity demanded by consumers tends to increase, and vice versa. This fundamental concept reflects the law of demand, which states that there is an inverse relationship between price and quantity demanded, ceteris paribus (all else being equal).

Understanding the demand curve is essential because it helps in analyzing consumer behavior, predicting how changes in price affect market demand, and thereby aids businesses and policymakers in making informed decisions regarding pricing strategies and market interventions.