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1. Demand

Demand refers to the quantity of a good or service consumers are willing and able to purchase at various prices in a given period.

Law of Demand:

  • As the price of a good increases, the quantity demanded decreases, and vice versa.

Factors Affecting Demand:

  • Income: Higher income increases demand for most goods.
  • Tastes and Preferences: Changes in preferences affect demand.
  • Prices of Related Goods: Substitutes and complements influence demand.

Real-Life Example:​

The demand for air conditioners increases during hot weather. This is because the weather influences consumer preferences, driving up the quantity demanded as temperatures rise.