theory of demand

The theory of demand describes how consumers decide to buy goods and services based on their preferences, income, and the prices of those items. When a product's price decreases, demand typically increases because more people are willing to purchase it. Conversely, if the price rises, demand usually falls as fewer consumers can afford it or choose to buy alternatives. This relationship between price and demand is illustrated by the demand curve, which generally slopes downwards. Overall, demand reflects how market conditions and consumer behavior interact to shape purchasing decisions.