The Theory of Demand

The theory of demand explains how the quantity of a good or service that consumers want to buy changes based on its price. Generally, when prices fall, people are more likely to buy more; when prices rise, they tend to buy less. This relationship is influenced by factors like consumer preferences, income, and prices of related goods. Demand helps businesses and policymakers predict how changes in price can affect sales and market behavior. Essentially, it describes how price and the desire to purchase are connected in a way that helps explain market trends.