Why does a consumer buy more when price is low and less when price is high?

Answer 1

Well, isn't that just a happy little question! When the price is low, it feels like a good deal, doesn't it? It's like finding a beautiful little tree in the forest at a bargain price. And when the price is high, it's like the sun peeking out from behind the clouds - you might want to wait for a better moment to make your purchase. Remember, it's all about finding that perfect balance between value and cost.

Answer 2

Consumers buy more when the price is low due to the law of demand in economics. This law states that as the price of a good decreases, the quantity demanded increases, assuming all other factors remain constant. Conversely, when the price is high, consumers tend to buy less because the higher cost makes the good less attractive or affordable. This behavior is driven by the basic economic principle of maximizing utility within budget constraints.

Answer 3

consumers buy more when price is low because they can then afford more. before

that they could not afford it so there quantity demand for the product will be low. after that it will increase because they will then be able to fully afford the new price. this is not ceteris paribus.

Due to the law of diminishing marginal utility. According to this law as a consumer increases the consumption of a good, the satisfaction derived from each additional unit of the good will go on falling. Secondly it is also because of Rational consumer behaviour, consumers are rational and they want to maximize satisfaction out of their limited means they must therefore decide on how to allocate their limited income over the different goods so that they can maximize total utility.

It also depends on the price effect=income effect+substitution effect(use for normal goods) implying when price falls the income effect is positive, substitution effect is negative and the quantity demanded increases.

There are exceptions too like;

1) Giffen good paradox

2) Engel's law states the proportion of income spent on basic necessities like foodstuffs declines as the level of income rises.

3)Veblen goods(show off) where when prices rises, demand also rises and prices fall, demand also falls.

4) Speculative good-rising prices are accompanied with rising demand_when consumers know that prices would increase more in future,they buy more now and demand rises immediately and prices rises.