Demand

Meaning:

Example:

For instance, if a luxury car is priced at ₹50 lakh and experiences high interest  from buyers, this reflects strong demand in that market segment.

How to understand demand:

Demand is a critical driver of production, compelling companies to manufacture goods that  align with consumer preferences.  It influences pricing strategies; elevated demand can result in price increases, while  diminished demand may necessitate price reductions to stimulate sales.

Importance of Demand:

Demand impacts various aspects of economic activity, including employment levels, as  increased demand can create more jobs.   It plays a vital role in guiding business decisions, helping firms plan inventory, marketing,  and expansion strategies.  Strong demand contributes to overall economic growth, boosting GDP and enhancing  business activity.

Types of Demand:

Price Demand: How quantity demanded changes with price fluctuations.

Income Demand: Changes in demand based on consumer income levels.

Cross Demand: Demand variations due to price changes of related goods (substitutes or  complements).

Direct Demand: Demand for goods used for final consumption (e.g., food, clothing).

Indirect Demand: Demand for goods used to produce other goods (e.g., raw materials,  machinery).

Joint Demand: Demand for two goods that are needed together (e.g., cars and petrol).

Elastic and Inelastic Demand: Sensitivity of demand to price changes.

How Demand Is Evolving:

There is a shift toward digital buying due to the rise of online shopping and e-commerce.  Consumer behavior is increasingly data-driven, with algorithms predicting demand patterns.  Instant demand is influenced by fast delivery options.  Changing lifestyles create new demands, such as health foods, electric vehicles (EVs), and

streaming services.  Social media plays a significant role in rapidly boosting demand for trendy products.  Global demand integration allows consumers to purchase products from worldwide markets.