price
money, business, book @ Pixabay

The price of a good has a huge impact on the demand for that product. The higher the price, the lower the demand and vice versa, but how does this work? This article will discuss consumer behavior and how it relates to prices and demand with an example of gasoline prices in California. * What is Demand? The demand for a good or service refers to how many people are willing and able to buy the product at different prices. Consumer behavior, which can be defined as “the study of individuals, groups, or organizations and their interactions with particular goods and services that they purchase”, influences whether someone will want to purchase an item priced higher than another person would.* * Factors That Affect Consumers’ Behavior: There are seven factors that affect consumers’ behavior when it comes to making purchases. They include benefits associated with consumption (how much utility does one get from consuming the product?), price expectations (what information do you have about what you should pay – past experiences), price fairness (is this fair based on what I know?), time expectations (will I have enough time to consume this product before it expires?), social norms and beliefs of the population, culture and tradition, convenience (can I make a purchase easily right now?) * The Effect on Prices: The price has such an effect that when car manufacturers wanted people to drive their new hybrid cars they

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