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If you have lots of product A, and all of your competitors also have lots of product A, you may need to reduce price in order to attract custom to your business and get a head start on your competition. If this process is repeated by all your competitiors, you may need to reduce your price further and so on.
The opposite applies when you have lots of product B and your competitors have little or no product B. You could then increase prices as there are few options for the customer, who will have little option but to pay the prices you ask.
( To Producer)
If you produce product A which is highly demanded in the market you may set your price high, but as the demand of the product decline you will be forced to reduce you price to maintain your costomers.
(To Consumers)
If a product is sold at a high price then you will buy/demand less quantities(necessary to purchase) but if the price decline then the demand will increase. But this is affected by several other factors, such as necessity of the product, usage of the product (technically we can say ELASTICITY of the product)
(Law of Demand)
The law of demand states that "the higher the price the lower the quantity demanded, the lower the price the higher the quantity demanded.
If the price goes up more potential customers will decide that the item isn't worth the price and will either do without or find a cheaper substitute.
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How may changes in prices affect the demand for a good?
Price and demand of a good have inverse relationship. An increase in the prices of a good will lead to fall in the demand of a good and viceversa.
What is in a free enterprise economy supply and demand affect the of a product?
In a free enterprise system, when supply is low and demand is high, prices are higher, but when supply is high and and demand is low, prices are lower.
Factors affecting demand for a commodity?
price of a commodity, the higher the prices, the lower the demand if there is not a equiblirum condition between demand and supply then it affect commodity demand , inflation and income, and monopoly in some commodity in some area is also affect demand of commodity
When supply and demand decreases real estate prices will?
The (market) prices affect supply and demand, not the other way around except if the supply and demand you're talking about are caused in another market than real estate.
How does supply and demand affect consumers?
Supply and demand are vital to consumers. If a product is in high demand the supply has to go up which can increase prices because of the demand. Prices end up going up because more has to be shipped and it would have to get to the location of demand in a certain time.
How may changes in prices affect the demand for a good?
Price and demand of a good have inverse relationship. An increase in the prices of a good will lead to fall in the demand of a good and viceversa.
What is in a free enterprise economy supply and demand affect the of a product?
In a free enterprise system, when supply is low and demand is high, prices are higher, but when supply is high and and demand is low, prices are lower.
Factors affecting demand for a commodity?
price of a commodity, the higher the prices, the lower the demand if there is not a equiblirum condition between demand and supply then it affect commodity demand , inflation and income, and monopoly in some commodity in some area is also affect demand of commodity
When supply and demand decreases real estate prices will?
The (market) prices affect supply and demand, not the other way around except if the supply and demand you're talking about are caused in another market than real estate.
How does supply and demand affect consumers?
Supply and demand are vital to consumers. If a product is in high demand the supply has to go up which can increase prices because of the demand. Prices end up going up because more has to be shipped and it would have to get to the location of demand in a certain time.
Why can the law of demand apply only in a free market economy?
demand refers to need for a resource. the law of demand states that an increase in demand will result in an increase in price, ceteris paribus. in a free market economy, sellers are free to increase prices when demand increases. in a closed economy prices are controlled by government. an increase or decrease in demand doesn't affect prices.
What factors affect demand?
There are a number of factors that affect resource demand. Some of them include amount of labor, income prices of the related aspects, availability of the resources and so much more.
What factors affect resource demand?
There are a number of factors that affect resource demand. Some of them include amount of labor, income prices of the related aspects, availability of the resources and so much more.
Why do heating oil prices change so frequently?
Oil prices change frequently for a number of different reasons. Crude oil is a big part of this, and will affect the price of oil. Demand can be different depending on the weather and economy. Seasons can also affect the demand for oil.
What is Nestle elasticity of demand?
it is price elastic around -1 because consumers do not want to buy chocolate if in recession. This type of market is inconsistent and depends on the prices heavily, if prices change it will have a direct affect upon the demand for it
Demand side and supply side shocks?
Supply shocks are unexpected events that suddenly change commodity or service prices. A demand side shocks affect demand in one or more countries and may include an unexpected change in interest rates. Supply side shocks affect prices and costs in countries and can include a construction or capital investment boom.
What kind of relationship does demand have with prices?
the relationship demand has with prices is that when the demand for a product is high the prices go high as well, like gas and food....
