Why does demand only "usually" go up when the price is lowered?

Prepare for the Consular Fellows Program Test with flashcards, multiple choice questions, and detailed explanations. Get ready for your exam results!

Demand usually goes up when the price is lowered due to the basic principle of price elasticity: consumers are generally more willing to purchase a product when it is available at a lower cost. However, factors other than price can also influence demand, which is why it is described as "usually."

For example, a product may have low demand due to a lack of consumer interest or preference, even if the price is reduced. Additionally, external factors such as changes in consumer income, tastes, or the availability of substitutes can significantly impact demand independently of price changes. Thus, while lowering prices may encourage more purchases, it does not guarantee that demand will increase across the board if other determinants of demand remain unfavorable.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy