Demand Analysis

Demand analysis focuses on understanding consumer behavior. 'Demand' is the desire for a commodity backed by the ability and willingness to pay for it. The Law of Demand states an inverse relationship between a commodity's price and its quantity demanded, ceteris paribus. This is why the demand curve slopes downwards. Demand is influenced by several determinants besides price, including income, tastes, prices of substitute and complementary goods, and expectations. A change in price causes a movement along the demand curve (expansion or contraction), while a change in any other determinant causes a shift in the entire curve (increase or decrease).