Final answer:
The demand curve for a good indicates the consumer's maximum willingness to pay for each unit, revealing the relationship between price and quantity demanded as they seek to maximize their utility.
Step-by-step explanation:
A consumer's demand curve for a good indicates the consumer's maximum willingness to pay for each incremental unit of the good, holding all other factors constant. This is based on the principle that individuals seek to maximize their utility, and thus, as the price of a good changes, so does the quantity demanded of that good. A demand curve shows a connection between prices and quantity demanded.
If the price of a good increases, the budget constraint rotates inwards, leading to a lower quantity demanded at each price point; conversely, if prices decrease, the quantity demanded at each price increases. These movements are depicted on the demand curve, which typically slopes downwards from left to right.
The law of demand is embodied in the demand curve: higher prices result in lower quantity demanded, while lower prices result in higher quantity demanded. This principle is a fundamental aspect of economic demand theory.