Walk into a store and make a purchase. Just like that, you have demonstrated the economic principle of demand. Demand is a measure of how willing you, the consumer, is to buy a good or service. When lots of people express their desire to purchase that good or service, that is market demand. Demand drives businesses, which do not produce anything unless there are customers to purchase their goods and services. Businesses compare the demand for a product to the amount they can supply, and that tells them how much to charge you for it, and demand changes affect the price you pay.
1. Demand Changes With Price
Remember a time where you discovered a sale. You bought things that you wouldn’t usually buy because they were at a lower price. The price of an item changes its demand. When prices increase, fewer people will choose to purchase a product. When prices decrease, more people will buy.