ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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when the cost of materials is cheaper
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when you can hire more skilled workers
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when a new company just like yours opens
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when consumers are only willing to pay a low price for your product
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Detailed explanation-1: -Higher prices create lower demand and lower prices create higher demand. This is due to the satisfaction levels of consumers. If they can’t afford your good, there won’t be much demand for it.
Detailed explanation-2: -The first is the substitution effect which states that as the price of the good declines, it becomes relatively less expensive compared to the price of other goods and thus the quantity demanded is greater at a lower price.
Detailed explanation-3: -Lowering prices is one of the most common strategies that companies use to increase market share for a product. If their competitors also lower their prices, a price war begins. Price wars are most common in industries where there is both heavy competition and several comparable products.
Detailed explanation-4: -It’s a fundamental economic principle that when supply exceeds demand for a good or service, prices fall. When demand exceeds supply, prices tend to rise.