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Based on the accompanying diagram of the demand curve for DVDs, which of the following best describes the relationship between price and quantity demanded?
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3. Supply and Demand
The Basics of Demand
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The demand curve focuses entirely on the:
A
relationship between the price of a good and the quantity demanded
B
cost of production for firms at various output levels
C
relationship between the price of a good and the quantity supplied
D
total revenue earned by producers at different prices
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Understand that the demand curve in microeconomics represents how much of a good consumers are willing and able to purchase at different prices.
Recall that the demand curve plots the relationship between the price of a good and the quantity demanded, holding other factors constant.
Recognize that the cost of production and quantity supplied relate to the supply curve, not the demand curve.
Note that total revenue is calculated as price multiplied by quantity demanded, but the demand curve itself does not directly focus on total revenue.
Conclude that the demand curve focuses entirely on the relationship between the price of a good and the quantity demanded.
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