What Is the Demand Curve?

Exceptions to the Demand Curve

There are some exceptions to rules that apply to the relationship that exists between prices of goods and demand. One of these exceptions is a Giffen good. This is one that is considered a staple food, like bread or rice, for which there is no viable substitute. In short, the demand will increase for a Giffen good when the price increases, and it will fall when the prices drops. The demand for these goods are on an upward-slope, which goes against the laws of demand. Therefore, the typical response (rising prices triggering a substitution effect) won’t exist for Giffen goods, and the price rise will continue to push demand.
In economics, a demand curve is a graph depicting the relationship between the price of a certain commodity (the y-axis) and the quantity of that commodity that is demanded at that price (the x-axis). Demand curves may be used to model the price-quantity relationship for an individual consumer (an individual demand curve), or more commonly for all consumers in a particular market (a market demand curve).
It has generally been assumed that demand curves are downward-sloping, as shown in the adjacent image. This is because of the law of demand: for most goods, the quantity demanded will decrease in response to an increase in price, and will increase in response to a decrease in price.^[1] There are certain goods which do not follow this law. These include Veblen goods, Giffen goods, stock exchanges and expectations of future price changes. The Sonnenschein–Mantel–Debreu theorem describes the shape that a market demand curve can take more precisely.

A possible market demand curve according to the Sonnenschein–Mantel–Debreu results
Demand curves are used to estimate behaviors in competitive markets, and are often combined with supply curves to estimate the equilibrium price (the price at which sellers together are willing to sell the same amount as buyers together are willing to buy, also known as market clearing price) and the equilibrium quantity (the amount of that good or service that will be produced and bought without surplus/excess supply or shortage/excess demand) of that market.^[1]:57 In a monopolistic market, the demand curve facing the monopolist is simply the market demand curve.
Movement along the demand curve is when the commodity experience change in both the quantity demanded and price, causing the curve to move in a specific direction. The shift in the demand curve is when, the price of the commodity remains constant, but there is a change in quantity demanded due to some other factors, causing the curve to shift to a particular side.^[2]
Demand curves are estimated by a variety of techniques.^[3] The usual method is to collect data on past prices, quantities, and variables such as consumer income and product quality that affect demand and apply statistical methods, variants on multiple regression. Consumer surveys and experiments are alternative sources of data. For the shapes of a variety of goods' demand curves, see the article price elasticity of demand.