Demand Curve: A graph illustrating how much of a given product a household would be willing to buy at different prices.
Example: Gallons of milk demanded per week at various prices.
Move the slider to see how quantity demanded changes with price.
| Price ($) | Quantity |
|---|---|
| 5.0 | 50 |
Prestigious goods do not follow the usual law of demand; demand often increases as price rises.
Example: Diamonds, luxury fashion handbags.
Move the slider: Higher price leads to higher quantity demanded. Point moves along the curve.
| Price ($) | Quantity |
|---|---|
| 500 | ? |
Giffen goods are goods for which demand increases as price increases, usually due to strong income effects outweighing substitution effects.
Example: Certain staple foods (like bread or rice) in conditions of extreme poverty.
Move the slider: Higher price leads to higher quantity demanded (rare).
| Price ($) | Quantity |
|---|---|
| 2.0 | ? |
Goods for which demand decreases when consumer income rises. They still follow a negatively sloped demand curve for price changes.
Example: Instant noodles, budget bus travel.
Move slider for price effect. Note: If income *increases*, this whole curve would shift left.
| Price ($) | Quantity |
|---|---|
| 1.5 | ? |
Goods that can replace each other. If the price of one increases, the demand for the other increases.
Example: Butter and margarine, coffee and tea.
Increase price of Good A (slider) to see demand for Good B (this curve) shift right.
Goods used together. If the price of one increases, the demand for the other decreases.
Example: Printers and ink cartridges, cars and gasoline.
Increase price of Good A (slider) to see demand for Good B (this curve) shift left.
Goods that follow the law of demand but are highly elastic (PED > 1). Small price changes produce larger changes in quantity demanded.
Example: High-end electronics, expensive watches, sports cars.
Move slider: Note the relatively large change in quantity for a price change (flatter curve).
| Price ($) | Quantity |
|---|---|
| 1000 | ? |
Goods essential for daily life; demand does not drastically change despite moderate price changes. They are typically less elastic (PED < 1).
Example: Basic utilities (electricity), essential medication, salt.
Move slider: Note the relatively small change in quantity for a price change (steeper curve).
| Price ($) | Quantity |
|---|---|
| 25 | ? |
Goods for which demand increases as consumer income rises. Generally follow the usual law of demand with respect to price.
Example: Casual dining, brand-name clothing, movie tickets.
Move slider for price effect. Note: If income *increases*, this whole curve would shift right.
| Price ($) | Quantity |
|---|---|
| 15 | ? |
Essential items purchased regularly, often in large volumes; demand may be relatively inelastic but perhaps more sensitive than absolute necessities.
Example: Bread, rice, cooking oil, milk.
Move slider: Demand is relatively inelastic (steeper curve), similar to necessary goods.
| Price ($) | Quantity |
|---|---|
| 3.0 | ? |
Move the slider to change the price and observe the quantity demanded for both types.
Quantity: ?
Quantity: ?
Move the slider to change income. Observe how the entire demand curve shifts.
Demand shifts right with higher income.
Demand shifts left with higher income.
Change the price of Good A. Observe how the demand curve for Good B shifts.
Demand shifts right when Price A rises.
Demand shifts left when Price A rises.
Click buttons to view different demand curve shapes. Unit elastic is shown as an approximation of a rectangular hyperbola.
Move the slider. Compare quantity change on the elastic (flatter, yellow) vs. inelastic (steeper, teal) curve.
Elastic Quantity: ? | Inelastic Quantity: ?