Conversely, a fall in price will increase the quantity demanded. A rise in price of a good or service almost always decreases the quantity demanded of that good or service. The total number of units that consumers would purchase at that price is called the quantity demanded. What a buyer pays for a unit of the specific good or service is called price. By this definition, a person who does not have a drivers license has no effective demand for a car. If you cannot pay for it, you have no effective demand. While a consumer may be able to differentiate between a need and a want, from an economist’s perspective they are the same thing. Demand is fundamentally based on needs and wants-if you have no need or want for something, you won't buy it. Demand for Goods and ServicesĮconomists use the term demand to refer to the amount of some good or service consumers are willing and able to purchase at each price.
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