By LEAH MONTEJANO
Staff Writer
Demand Definition; The desire of consumers and buyers for a specific commodity, service, or other product.
Law of Demand
The Law of Demand and Law of Supply work together to explain how the market allocates resources and finds out the prices of goods and services. In the law of demand the higher the price the lower the amount that is demanded, this is a result of diminishing marginal utility. Diminishing Marginal Utility is the fact that consumers use goods from the market to satisfy their most mandatory needs first. On an economic graph, a market demand curve shows the quantity demanded at each price. Changes in price can be represented by movement along the curve but they do not increase/decrease the demand.
Factors of Demand
Demand has 6 factors it follows. These factors include; Consumer Income, Consumer Tastes, Number of Consumers, Substitutes & Complements, and Changes in Expectations. Consumer Income means the amount of money the consumers are spending. Consumer Tastes refer to what people find attractive in advertising. The Number of Consumers is how many people are in the market. Substitutes are what can be replaced as an alternative while a Complement is what is used with another product. Lastly, Change in Expectations ask what does the future look like and how will items last my satisfaction for that long.
Demand Elasticity
Demand Elasticity explains how sensitive demand is to a product compared to differences in other economic facts such as price and income. A way to determine Elasticity in Demand is, if the demand changes more than the change in price or income, it has elastic demand but if the demand changes by less than the change in price or income, it has inelastic demand.
Change in Demand
A change in demand expresses a shift in the buyer’s desire to continue purchasing items in regard to the price. The change can be triggered by changes in income levels, consumer tastes, etc. The change in demand can be shown on a graph by shifting to the right.
Supply Definition: This describes the total amount of a specific good or service that is available to consumers.
Law of Supply
The Law of Supply states that a higher price will encourage producers to supply higher quantities to the market. This is because companies seek revenue increases when they expect to receive more money they create more of the product. Supply in a market can be shown on a graph as an upward-sloping supply curve showing how the quantity supplied will react to various prices over time