What Is Demand And Supply And Its Impacts
Demand in economics is the consumer's desire and ability to purchase a good or service. It's the underlying force that drives economic growth and expansion. Without demand, no business would ever bother producing anything. There are five determinants of demand. The most important is the price of the good or service itself. The second is the price of related products, whether they are substitutes or complementary. Circumstances drive the next three determinants. These are consumers' incomes, their tastes, and their expectations. The law of demand governs the relationship between the quantity demanded and the price. This economic principle describes something you already intuitively know. If the price increases, people buy less. The reverse is also true. If the price drops, people buy more. But, price is not the only determining factor. The law of demand is only true if all other determinants don't change. In economics, this is called ceteris paribus. The law of dem