In microeconomics, what does a demand curve show?

• A. The relationship between the price of a good and the quantity demanded of that good, holding other factors constant
• B. The minimum average cost of producing each quantity of output
• C. The relationship between consumers’ income and the quantity demanded of a good, holding price constant
• D. The relationship between the price of a good and the quantity supplied of that good

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of a demand curve in microeconomics. It is a graphical representation that shows how much of a good consumers are willing and able to purchase at different prices.
2. Step 2: Recognize that the demand curve plots the relationship between the price of a good (on the vertical axis) and the quantity demanded (on the horizontal axis).
3. Step 3: Note that the demand curve assumes other factors affecting demand, such as consumer income, tastes, and prices of related goods, are held constant (ceteris paribus).
4. Step 4: Differentiate the demand curve from other curves such as the supply curve, which shows the relationship between price and quantity supplied, or cost curves, which relate to production costs.
5. Step 5: Conclude that the demand curve specifically illustrates the inverse relationship between price and quantity demanded, meaning as price decreases, quantity demanded generally increases, and vice versa.