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Demand Curve

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PPGPortal > Home > Concept Dictionary > D, E > Demand Curve

Demand Curve 

A curve that relates the quantity demanded of a particular good in a market to different price levels.

(Dwayne Benjamin, Toronto PPG 1002H)  




A simple example can be seen in the demand for apartments.

  • One way to derive the demand curve: imagine that every potential renter has a reservation price for a nearby apartment.
  • The reservation price is the highest price that an individual is willing to pay to purchase the good.
  • For example, assume that only one person is willing to pay $500 per month for an apartment.
  • Assume similarly, that a second person is willing to rent if the price is no greater than $490.
  • And so on, with the number of potential renters increasing as the monthly rent falls.

  On the demand curve

  • Note that for p*, only those for whom the price is lower than their reservation price will be interested in renting.
  • More generally, we can draw a smoother looking demand curve for “close” apartments.
  • For any p*, the demand curve gives us the number of people willing to rent an apartment at that rental rate.




Prepared by Ian Clark and Ben Eisen from Dwayne Benjamin's class presentation.


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School of Public Policy and Governance