ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An incentive for buyers is the reward of saving money. An incentive for sellers is an increase in profit or sales. Prices send signals to buyers. Low prices are an incentive to buyers to spend their money now.

Detailed explanation-2: -What is Demand? The law of demand states that consumers buy more of a good when its price decreases and less when its price increases. The law of demand is the result of two separate behavior patterns that overlap, the substitution effect and the income effect.

Detailed explanation-3: -Lower prices for goods or services provide incentives for buyers to purchase more of that good or service and for producers to make or sell less of it. An increase in the price of a good or service encourages people to look for substitutes, causing the quantity demanded to decrease, and vice versa.

Detailed explanation-4: -Demand is generally considered to slope downward: at higher prices, consumers buy less. The point at which the two curves intersect represents the market-clearing price-the price at which demand and supply are the same. Prices can change for many reasons (technology, consumer preference, weather conditions).

Detailed explanation-5: -Sales and discounts are price incentives that motivate consumers to buy more goods for less money. High prices are also incentives for new suppliers or existing ones to produce more of an expensive product to exchange for more profits.