What does the demand curve represent?

The demand curve illustrates the relationship between price and the quantity demanded of a good or service, assuming all other factors remain constant. This principle is known as the ceteris paribus assumption, which is crucial in economic analysis. As the price of a good decreases, consumers are generally willing and able to purchase more of that good, resulting in a downward-sloping demand curve. Conversely, if the price increases, the quantity demanded typically falls. This clear inverse relationship is visually represented on the graph of the demand curve, where the vertical axis indicates price and the horizontal axis shows quantity demanded.

Understanding this concept is foundational in macroeconomics, as it helps explain consumer behavior and market dynamics. The other options do not accurately represent the specific function of the demand curve: option A relates to cost and revenue rather than demand; option C refers to market equilibrium, which is determined by both demand and supply; and option D discusses aggregate demand, which encompasses the total demand for goods and services in an economy rather than the specific demand curve for a single good.