Q:

What is the economic meaning of demand?

A:

In economics, demand is a measure of how much buyers want or need a product. For example, consumers may collectively avoid buying a particular product because they don't understand it or don't believe it has value, resulting in low demand.

The law of supply and demand influences free market economies because sellers can raise prices on high-demand products. However, factors such as competition and supplies balance out demand by stabilizing prices. When more companies produce the same product or make them widely available, more consumers have access to the product. Competition counteracts high demand and forces sellers to lower prices to retain their customer base. Lack of marketing may also weaken demand simply because the product doesn't have enough visibility.


Is this answer helpful?

Similar Questions

  • Q:

    What is price elasticity?

    A:

    Price elasticity, or price demand, is the measure of how much the demand of a product can respond to a change in its price. Price elasticity is an important concept in the law of supply and demand.

    Full Answer >
    Filed Under:
  • Q:

    What is the price elasticity of demand?

    A:

    Investopedia defines price elasticity of demand as a measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. The price elasticity of demand is equal to the percent change in quantity demanded divided by the percent change in price.

    Full Answer >
    Filed Under:
  • Q:

    What happens when supply exceeds demands?

    A:

    The law of supply and demand in economics indicates that a "surplus" exists when supply of a given product exceeds demand. If the supply of gum exceeds demand, for instance, resellers end up with excess inventory that they discount or throw out. A surplus also contributes to lowering prices because companies are competing for business, rather than consumers desperately trying to find an affordable option.

    Full Answer >
    Filed Under:
  • Q:

    How is economics like a science?

    A:

    According to the Business Insider, economics is like a science because economists use an empirical or scientific method to solve problems. In addition, theories in economics can be tested. The Business Insider adds that economists have access to big data, which allows them to isolate and establish the causal relationships of a scientific inquiry.

    Full Answer >
    Filed Under:

Explore