When supply is high and the demand is low, the price will decrease. When the supply is low and the demand is high, the price will increase. The price of goods and services is determined by the supply in the market and the demand for them. If demand is the quantity consumers are willing to buy at a given price, supply is the quantity producers are willing to offer. Related: Supply and Demand: Definition and How it Works The relationship between supply and demand Businesses that accurately meet demand with their supply of products or services greatly benefit in profits and heightened brand awareness. What is the definition of demand in economics?Įconomic demand is the number of consumers willing to purchase goods or services at a certain price. In this article, we explain how demand works in economics, the seven types of demand and factors that influence it, as well as the relationship between supply and demand. Consumer demand drives production and supports a thriving economy by decreasing inflation and interest rates. The economy relies on the willingness of consumers to make purchases and the ability of companies to supply them.
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