The law of demand states that as prices changes, the demand for those products will also change. Higher prices tend to lower demand while lower prices tend to increase demand. I would say that this law does reflect the behavior of most people for most products. While there are some products or services that people would buy regardless of the price, such as electricity, medical services, and gasoline, for most products people adjust the amount that they buy based on the price of the product. Even for products with relatively inelastic demand, consumers may use less of those products when prices become too high.
When the price of gasoline reached over $4.00 a gallon, people still bought gasoline, but they also changed some of their driving habits and patterns to allow them to purchase less gasoline. When the price of orange juice increased because the supply of oranges dropped due to extremely cold weather, people began to buy alternative products such as grape juice and apple juice. Some people stopped drinking any kind of juice completely. For the average person who needs to manage his or her finances, the price of a product will impact how much of that product or service they will buy or use.
https://economictimes.indiatimes.com/definition/law-of-demand
https://www.thebalance.com/law-of-demand-definition-explained-examples-3305707
Thursday, May 26, 2016
Do you think the law of demand accurately reflects most people's behavior?
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