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| 1. |
Theory of demad |
| Answer» Demand theory\xa0is an economic principle relating to the relationship between consumer\xa0demand\xa0for goods and services and their prices in the market.\xa0Demand theory\xa0forms the basis for the\xa0demand\xa0curve, which relates consumer desire to the amount of goods available.\xa0An effective demand has three characteristics namely, desire, willingness, and ability of an individual to pay for a product. The demand for a product is always defined in reference to three key\xa0factors, price, point of time, and\xa0market\xa0place.\xa0The law of\xa0supply\xa0and\xa0demand\xa0is a\xa0theory\xa0that explains the interaction between the sellers of a resource and the buyers for that resource. The\xa0theory\xa0defines what effect the relationship between the availability of a particular product and the desire (or\xa0demand) for that product has on its price. | |