Demand, by definition, is the quantity of a good or service that consumers are willing and able to purchase at a given price in a given time period. The Law of Demand simply states that as the price of a product falls, the quantity demanded of the product will usually increase, ceteris paribus. The quantity of demand affected by many factors such as level of income, prices of substitutes, expectations of customers and taste, preference of consumers.
As I’m a basketball player, basketball shoes are a necessity for me. One of the stronger factors that push me to buy Nike’s shoes is the solid advertisements of them. When two shoes have exact the same functions, by the advertising and having superstar endorse for the NIKE shoes, people are more willing to buy it instead of the no brand shoes. So if the products fit in with consumers taste and preference, it will lead to an increase of the demand.
Another important factor affect the demand is the prices of the substitutes. When the price of the substitutes falls, people are more willing to purchase the substitutes with the same features at the lower price, so it will cause a decrease of your product’s quantity demand. For example, the Adidas are having a big sale, all the basketball shoes are 20% off, I’m willing to buy it instead of buying Nike’s basketball shoes at an expensive price.
In conclusion, Economics can be very understandable and useful to our life. After studied for demand and supply theory, it help me understand how the prices of the products changed, so I can be more wiser on my money management.
Although I am not sure if Economics help in money management, at least it will tell you that whatever you spend on incurs an opportunity cost and so you will need to think carefully before spending!
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