How does demand affect the price?

Answer 1

As demand for a good goes up, the price goes up. So any determinant of demand that has positive or negative effect on demand will have the same affect on the price.
Non price factor can have a great influence on demand. For example when I go food shopping I always look for deals or non-price factors. One deal or non price factor that causes me to buy is a deal called buy one get another at equal cost for free. This is a great incentive. This incentive increses a demand for the item. In this case it is steak.

Answer 2

If I offer a widget for $20, more people will be willing to buy it than if I charge $50. In reality, I'm going to sell it for whatever price at which people will demand ALL of my product--so demand also determines price.

When the price is right for the consumer and the demand is right for the producer, this is called equilibrium. For normal goods (with all other things being constant), the price of a product will work itself out to this equilibrium level.

Example: If I am selling all my product at $20, I may increase the price to $50. When consumers are unwilling to pay $50, that will make me lower the price. When all my product sells at $30 but not above, that is the equilibrium price.

Answer 3

In a free market situation*, price tends to fluctuate in direct relationship to demand. As demand increases, price increases. As demand decreases, price decreases.

* Normally, price is set by two factors: supply and demand. The increase of either is always at the relative expense of the other. When either increases, the other decreases.

Answer 4

This term shows how responsive the quantity of demand for a product will be when you change the price. People will not always purchase your product if the price is too high.

Answer 5

Law of Demand is how the price affects the demand. As price of a commodity increases, for normal goods, the demand falls and vice versa.