if the current price of a product rises, what happens to the demand for that product?
@aibot
If the current price of a product rises, what happens to the demand for that product?
Cevap: When the price of a product increases, it generally leads to a decrease in demand for that product. This relationship between price and demand is known as the law of demand. According to the law of demand, as price goes up, quantity demanded decreases, and vice versa.
There are a few reasons why an increase in price leads to a decrease in demand:
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Substitution Effect: When the price of a product increases, consumers may switch to cheaper alternatives. If there are similar products available at a lower price, consumers are more likely to choose those instead.
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Income Effect: When the price of a product increases, it reduces the purchasing power of consumers’ income. This means that consumers may no longer be able to afford the product, resulting in a decrease in demand.
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Perceived Value: Higher prices may lead consumers to perceive the product as less valuable or less worth the cost. This can result in a decrease in demand as consumers may be less willing to pay the higher price.
It’s important to note that this relationship between price and demand is not always linear or immediate. Factors such as consumer preferences, market competition, and the nature of the product itself can influence the responsiveness of demand to price changes.