Price System

Definition of Demand

Demand refers to the quantity of a good or service that consumers are willing and able to buy at various prices over a period of time.

Factors Affecting Demand

• **Price of the good or service**: As the price increases, the quantity demanded decreases, and vice versa.
• **Income of consumers**: As income increases, the quantity demanded of normal goods increases, and vice versa.
• **Prices of related goods**: The demand for a good is affected by the prices of substitute goods (which can be used in place of the good) and complementary goods (which are used together with the good).
• **Consumer tastes and preferences**: Changes in consumer tastes and preferences can affect the demand for a good or service.
• **Number of consumers**: As the number of consumers increases, the total demand for a good or service increases.

Demand Curves

Downward-sloping demand curve: Represents the inverse relationship between price and quantity demanded.

Shifts in Demand

• **Increase in demand**: Shift of the demand curve to the right, resulting in a higher quantity demanded at the same price.
• **Decrease in demand**: Shift of the demand curve to the left, resulting in a lower quantity demanded at the same price.