Demand is the relationship between the price of a good or service and the quantity of that good or service that consumers are willing and able to purchase....
Demand is the relationship between the price of a good or service and the quantity of that good or service that consumers are willing and able to purchase.
Determinants of demand are factors that influence the quantity of a good or service that consumers are willing and able to purchase at a given price. These factors are categorized into two groups: intrinsic factors and extrinsic factors.
Intrinsic factors are those that are inherent to the good or service itself. For example, the price of a car is largely determined by the cost of raw materials, labor, and production time.
Extrinsic factors are those that are outside of the good or service itself. For example, the price of a car may also be affected by changes in consumer preferences, income levels, and economic conditions.
The law of demand states that, all else being equal, when the price of a good or service increases, the quantity of that good or service that consumers are willing and able to purchase will decrease. This is because consumers will be less willing to buy a good or service when it is more expensive.
The law of demand can be explained by assuming that consumers are rational actors who are trying to maximize their utility. When the price of a good or service increases, the utility that consumers derive from that good or service also increases. However, when the price of a good or service increases, consumers are willing to pay less for that good or service. This is because consumers are rational actors who will try to buy the good or service at a lower price