What does a demand curve illustrate?

A demand curve illustrates the relationship between price and the quantity demanded. This curve typically slopes downwards from left to right, indicating that as the price of a good or service decreases, the quantity demanded by consumers generally increases. Conversely, if the price rises, the quantity demanded tends to decrease. This inverse relationship is a fundamental principle of demand in economics.

Understanding this curve is essential for analyzing how consumers respond to price changes and for businesses to make pricing and production decisions. The demand curve helps visualize consumer behavior in the marketplace and supports various economic models and theories that predict how changes in prices can affect overall demand.

The other options do not accurately describe what a demand curve represents. Some focus on aspects like production quantity or total revenue, which pertain to different economic concepts such as supply curves or revenue calculations, while others address market competition, which is unrelated to the demand curve itself.