Empirical methods Prescriptive and policy In economics, demand is the quantity of a good that consumers are willing and able to purchase at various prices during a given time.
[2] The factors that influence the decisions of household (individual consumers) to purchase a commodity are known as the determinants of demand.
[4] This negative relationship is embodied in the downward slope of the consumer demand curve.
Examples include hotdogs and mustard, beer and pretzels, automobiles and gasoline.
Mathematically, the variable representing the price of the complementary good would have a negative coefficient in the demand function.
The mathematical relationship between the price of the substitute and the demand for the good in question is positive.
[5] Consumers' Expectations: Consumers' expectations regarding factors such as future prices, income, and availability of goods play a crucial role in determining the demand for goods and services in the present period.
In the same way if consumers expect scarcity of certain goods in future on account of their expectation that its production may fall in future due to strike, crop failure, etc., the current demand for such goods would increase.
For instance, the demand for luxury cars and expensive mobile sets has increased in recent years partly because of the desire of the people to follow the consumption style of others.
For instance, the demand for ice, fans, air conditioners, cold drinks, cotton clothes, etc increases in summer.
Likewise, in winter, the demand for heaters, blowers, hot drinks, woollen cloths, etc increases.
[8] The curve shows how the price of a commodity or service changes as the quantity demanded increases.
The graph shows the law of demand, which states that people will buy less of something if the price goes up and vice versa.
Diabetics need insulin to survive so a change in price would not effect the quantity demanded.
Perfectly competitive firms have zero market power; that is, they have no ability to affect the terms and conditions of exchange.
The intercept of the curve and the vertical axis is represented by a, meaning the price when no quantity demanded.
Practically every introductory microeconomics text describes the demand curve facing a perfectly competitive firm as being flat or horizontal.
"[14] if the firm raised its price by three tenths of one percent the quantity demanded would drop by nearly 100%.
Three tenths of one percent marks the effective range of pricing power the firm has because any attempt to raise prices by a higher percentage will effectively reduce quantity demanded to zero.
Demand management has a defined set of processes, capabilities and recommended behaviors for companies that produce goods and services.
Effective demand management follows the concept of a "closed loop" where feedback from the results of the demand plans is fed back into the planning process to improve the predictability of outcomes.
Volatility is being recognized as significant an issue as the focus on variance of demand to plans and forecasts.
Service differentiation is one of the popular strategies used to compete in a no demand situation in the market.
Latent demand: At any given time it is impossible to have a set of services that offer total satisfaction to all the needs and wants of society.
Seasonal demands create many problems for service organizations, such as idling the capacity, fixed cost and excess expenditure on marketing and promotions.
Strategies used by firms to overcome this may include nurturing the service consumption habit of customers so as to make the demand unseasonal, or recognizing markets elsewhere in the world during the off-season period.
Demands do fluctuate randomly; therefore, they should be followed on a daily, weekly or monthly basis.
E. F. Schumacher challenges the prevailing economic assumption that fulfilling demand is the purpose of economic activity, offering a framework of what he calls "Buddhist economics" in which wise demands, fulfilling genuine human needs, are distinguished from unwise demands, arising from the five intellectual impairments recognized by Buddhism:[15] The cultivation and expansion of needs is the antithesis of wisdom.
[16]Demand reduction refers to efforts aimed at reducing the public desire for illegal and illicit drugs.
Energy demand management, also known as demand-side management (DSM) or demand-side response (DSR), is the modification of consumer demand for energy through various methods such as financial incentives and behavioral change through education.