Demand Analysis

Demand for goods and services arises from wants or desires on the part of individuals and households. However, such desire in itself does not constitute demand. A lot of people want a whole lot of things but it has no economic significance. Desires or wants must be backed by purchasing power in order to take the form of effective demand at the market place. That is to say, consumers must be willing and able to buy. Thus, consumers demand for goods is governed by their income, price of the good in question and prices of other related goods. Also, because they are respired to pay for the goods and services, they usually choose among the alternatives.,The choice on the part of the consumer is based on utility or satisfaction obtainable freshener particular good or service on the one hand and its scarcity on the other. This explains he reason why even the most useful intern like water is priced little or nothing whereas least valuable items like diamond commands a very high price. The former despite having immense utility is abundant and a nature's bounty whereas the latter despite having little value is scarce indeed.