The demand for products changes based on whether they are necessities or luxuries.
Necessities: These are things we really need, like food and medicine. The demand for necessities is inelastic, which means that if prices go up, people will still buy them. For example, if the price of bread increases, most people will still buy it because they need it.
Luxuries: These are items people want but don’t need, like vacations and fancy clothes. The demand for luxuries is elastic. This means that if prices go up, many people might buy less or look for cheaper options. For instance, if the price of a luxury car goes up, some buyers might decide to wait before buying or choose a different brand.
Knowing how demand works can help businesses and leaders make better choices!
The demand for products changes based on whether they are necessities or luxuries.
Necessities: These are things we really need, like food and medicine. The demand for necessities is inelastic, which means that if prices go up, people will still buy them. For example, if the price of bread increases, most people will still buy it because they need it.
Luxuries: These are items people want but don’t need, like vacations and fancy clothes. The demand for luxuries is elastic. This means that if prices go up, many people might buy less or look for cheaper options. For instance, if the price of a luxury car goes up, some buyers might decide to wait before buying or choose a different brand.
Knowing how demand works can help businesses and leaders make better choices!