For the basic essentials of life, demand is based on:
c. The urgency of need.
Demand is an economic principle that describes a consumer's desire and willingness to pay a price for a specific good or service. Holding all other factors constant, an increase in the price of a good or service will decrease demand, and vice versa. Think of demand as your willingness to go out and buy a certain product.
Businesses often spend a considerable amount of money to determine the amount of demand the public has for their products and services. Incorrect estimations either result in money left on the table if demand is underestimated or losses if demand is overestimated.
Demand is closely related to supply. While consumers try to pay the lowest prices they can for goods and services, suppliers try to maximize profits. If suppliers charge too much, demand drops and suppliers do not sell enough product to earn sufficient profits.
If suppliers charge too little, demand increases but lower prices may not cover suppliers’ costs or allow for profits. Some factors affecting demand include the appeal of a good or service, the availability of competing goods, the availability of financing and the perceived availability of a good or service.
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