Economics: Demand

Filed Under (Economics, Savings) by ravi on 30-11-2008

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Little do people know that demand by consumers is what sets the price of a good within the free market. Demand is dictated by the acronym TRIBE.

Tastes
Relative Goods
Income

Number of Buyers
Expectations

These are the only things that dictate demand, and notice how price is not included in the determinants for demand. Demand just like supply are the two factors that dictate the price in the free market, and the two can only be manipulated when there is a free market. Of course because we have government intervention in our daily lives we no longer live in a free market. Our government decides to grant regional monopolies that only add to barriers to entry that keep competition from coming in. Unfortunately lobbyist continue to do this and as a result I doubt that we will ever see a day where we truly have a free market where the consumer decides what is produced and at what price it sells at.

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