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Exploring what demand means and why people want to buy certain things at certain times.
Have you ever wondered why a certain toy becomes the 'must-have' item that everyone is talking about, while other toys just sit on the shelf gathering dust?
In the world of economics, demand is more than just a wish list. To have demand for something, two things must be true: you must want it, and you must be able to pay for it. Imagine you see a cool new video game that costs . If you love the game but your piggy bank is empty, you don't have 'demand' in economic terms. You only create demand when you have that in your hand and are ready to spend it. We can think of it as a simple equation: .
1. You walk into a shop with in your pocket. 2. You see a giant chocolate bar for . 3. You love chocolate (Desire). 4. You have enough money (Ability). 5. Result: You represent one unit of demand for that chocolate bar.
Quick Check
If you really want a new bicycle but you don't have enough money to buy it yet, do you have 'demand' for that bicycle?
Answer
No, because demand requires both the desire to have it and the ability to pay for it.
Demand isn't a fixed number; it goes up and down like a roller coaster! The biggest factor is usually price. Generally, when the price of an item goes down, more people want to buy it. This is called the Law of Demand. Other factors include necessity (things you need, like water) and tastes (things you like, which can change over time). For example, the demand for heavy coats is very high in the winter but drops to almost zero during a summer day!
1. On a cool day, you sell lemonade for a cup and sell cups. 2. On a very hot day, the temperature hits . 3. Even though the price is still , you sell cups. 4. The demand increased because the need for a cold drink went up due to the weather.
Quick Check
If a store has a 'Half-Off Sale' on sneakers, what will likely happen to the demand for those sneakers?
Answer
The demand will likely increase because the lower price makes it easier for more people to afford them.
Have you ever bought something just because all your friends had it? This is called a trend. When an item becomes 'popular,' demand increases even if the price stays the same. This is often driven by advertising or social media. However, trends can fade quickly. When a toy is no longer 'cool,' the demand drops, and stores might have to lower the price just to get people to buy the leftover stock.
1. A new type of monster trading card becomes a hit at school. 2. Originally, kids wanted the cards. 3. After a famous YouTuber shows them off, kids want them. 4. The demand has increased by people simply because of popularity and social influence.
Which of these is the best definition of 'Demand'?
If the price of a video game drops from to , what happens to demand?
A change in the weather can cause the demand for certain products to change.
Review Tomorrow
Tomorrow morning, try to remember the two parts of the 'Demand Equation' ().
Practice Activity
Next time you are at a store, look for an item with a 'Clearance' or 'Sale' sign. Ask yourself: Did the store lower the price because the demand was too low?