Answer to Question #320593 in Macroeconomics for Rose

Question

By using a relevant diagram, illustrate and explain how the market

demand curve is derived. A brief explanatory discussion of the graph is

required with reference to price and quantity.

Answer 1

The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period of time. In a typical representation, the price will appear on the left vertical axis, the quantity demanded on the horizontal axis. 

For example, if the price of corn rises, consumers will have an incentive to buy less corn and substitute it for other foods, so the total quantity of corn consumers demand will fall.