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Demand

Demand refers to the quantity of a good or service that consumers are willing and able to purchase at a given price over a certain period. It is one of the core principles in economics and plays a crucial role in determining market prices and production decisions. According to the law of demand, all else being equal, the quantity demanded of a good decreases as its price increases, and vice versa. Several factors influence demand, including consumer income, preferences, prices of related goods, and future expectations.

Example

If the price of coffee drops, the demand for coffee may increase as more consumers find it affordable.

Key points

• Demand is the desire and ability to purchase goods and services.

• Influenced by price, income, preferences, and expectations.

• Central to price determination in a market economy.

Quick Answers to Curious Questions

The law of demand states that as the price of a good increases, the quantity demanded decreases, and vice versa, assuming all other factors remain constant.

Demand is influenced by price, consumer income, preferences, and prices of related goods, such as substitutes and complements.

Demand helps determine market prices, production levels, and resource allocation, making it essential for understanding consumer behavior and economic policy.