In microeconomics, what does a demand curve show?

• A. The minimum average cost of producing each output level in the long run
• B. The relationship between the price of a good and the quantity demanded by consumers over a given period, holding other factors constant
• C. The relationship between the price of a good and the quantity supplied by firms over a given period, holding other factors constant
• D. The set of combinations of two goods that yield the same level of utility to a consumer

Answer: (B)

Verified step by step guidance

1. Step 1: Understand that a demand curve is a fundamental concept in microeconomics representing consumer behavior.
2. Step 2: Recognize that the demand curve illustrates how the quantity demanded of a good changes in response to changes in its price, assuming all other factors remain constant (ceteris paribus).
3. Step 3: Note that the demand curve typically slopes downward, indicating that as the price decreases, the quantity demanded increases, and vice versa.
4. Step 4: Differentiate the demand curve from other curves such as the supply curve (which shows quantity supplied at different prices) and cost curves (which relate to production costs).
5. Step 5: Conclude that the demand curve specifically shows the relationship between the price of a good and the quantity consumers are willing and able to purchase over a given period.