Consumer preferences play a big role in how much demand there is for different products. Here’s a simple breakdown of how this works:

1. Necessities vs. Luxuries:

   • Necessities are things we really need, like bread or medicine.
     These usually have inelastic demand. This means that even if prices go up, people will still buy them.

   • Luxuries are things that are nice to have but not essential, like vacations or fancy handbags.
     These often have elastic demand. If prices go up, people might decide not to buy them.

2. Substitutes:

   • Some products have easy alternatives, like butter and margarine.
     When the price of one goes up, people can easily switch to the other.
     This means these goods have elastic demand.

3. Consumer Trends:

   • Sometimes, products become really popular, like avocado toast.
     When this happens, demand can become more inelastic.
     That means people are willing to pay higher prices for things they really like.

Understanding how these things work helps businesses and policymakers see how demand might change!