Demand Theory

Demand theory explains how consumers decide to buy goods and services based on various factors. At its core, demand refers to the desire for a product and the ability to pay for it. Key elements include price: as prices drop, demand typically increases, and vice versa. Other influences include consumer preferences, income levels, and the availability of alternatives. In essence, demand theory helps us understand how these factors interact to shape market behavior, guiding businesses and policymakers in making informed decisions.