Economics : Demand
Date Submitted: 09/10/2006 06:07:09
Category: / Literature / European Literature
Length: 5 pages (1466 words)
Category: / Literature / European Literature
Length: 5 pages (1466 words)
Demand: the quantity of a good or service that consumers are willing and able to purchase at various price levels at a given point in time.
Individual demand: demand of individual consumers
Market demand: demand by all consumers for a g or s.
* Market demand obtained by summing quantities demanded by all individual consumers at various price levels.
Factors effecting market demand:
* the price of the good or service itself: the consumer must decide whether …
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…amp;gt;Firms and governments must understand price elasticity of demand
Business firms:
*<Tab/>Must understand price elasticity of demand to decide optimal pricing strategy
-<Tab/>if demand relatively elastic- firm knows lowering prices greatly expands volume of sales = ↑ total revenue
-<Tab/>if demand relatively inelastic- firm ↑ price = ↑ total revenue because reduction in sales < price increase
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