Demand: the quantity of a good or service that consumers are willing and able to purchase at various price levels at a given point in time. Individual demand: demand of individual consumers Market demand: demand by all consumers for a g or s. * Market demand obtained by summing quantities demanded by all individual consumers at various price levels. Factors effecting market demand: * the price of the good or service itself: the consumer must decide whether …showed first 75 words of 1466 total…

…showed last 75 words of 1466 total…amp;gt;Firms and governments must understand price elasticity of demand Business firms: *<Tab/>Must understand price elasticity of demand to decide optimal pricing strategy -<Tab/>if demand relatively elastic- firm knows lowering prices greatly expands volume of sales = ↑ total revenue -<Tab/>if demand relatively inelastic- firm ↑ price = ↑ total revenue because reduction in sales < price increase