Theory of demad

Demand theory is an economic principle relating to the relationship between consumer demand for goods and services and their prices in the market. Demand theory forms the basis for the demand curve, which relates consumer desire to the amount of goods available. An effective demand has three characteristics namely, desire, willingness, and ability of an individual to pay for a product. The demand for a product is always defined in reference to three key factors, price, point of time, and market place. The law of supply and demand is a theory that explains the interaction between the sellers of a resource and the buyers for that resource. The theory defines what effect the relationship between the availability of a particular product and the desire (or demand) for that product has on its price.