Answer to Question #197951 in Economics for Vaishali

Question

Demand forecasting is not a speculative exercise into the unknown. It is essentially a reasonable judgement of future probabilities of the ma ket events based on scientific background. Explain the statement by elaborating different qualitative and quantitative

methods of demand forecasting.

Answer 1

Any buyer seeks to fully satisfy all his needs by purchasing various goods. However, he is limited in his actions by the amount of money at his disposal, which he has the ability to transfer in exchange for the set of goods he needs. Thus, the buyer will strive to make a certain combination of various goods planned for purchase, which will be available to him at its total cost and at the same time will best satisfy his individual needs as a whole. Individual demand is formed - the intention of buyers to buy the goods they need, supported by their ability to pay for these goods.

The term "demand" has a specific meaning for the economist. Demand is the number of goods and services that buyers want and can purchase at a given moment at a certain price and under certain conditions. Demand is plotted as a graph showing the quantity of a product that consumers are willing and able to buy at some possible price over a period of time. Demand expresses a number of alternative possibilities, which can be presented in the form of a table. It shows the quantity of a product that will be demanded at different prices. Let's give an example: someone wanted to buy a computer with strictly defined technical characteristics. Where does he start? From the analysis of prices in various markets and in stores for similar goods. Then he compares the prices of computers with the consumer qualities he needs. Next comes the analysis of your own income and the conclusion follows about how the purchase may affect the contents of the wallet. As a result, depending on the prices of computers and the thickness of the wallet, goods with optimal consumer characteristics are purchased in a particular store.

The demand price is understood as the maximum price that the consumer agrees to pay when purchasing a given product or a certain amount of it. It is clear that the main desire of the buyer is to buy a product cheaper and better. And from here it is clear that the lower the price of a product, the quality of which satisfies the buyer, the more consumers will want to purchase this particular product. This situation is formulated in the following law of demand: All other things being equal, the lower the price, the greater the amount of demand, and vice versa.

Analyzing the graph, the following points can be highlighted:

1) the demand curve D shows how much of the product consumers would have purchased at different price levels;

2) the curve D plotted at certain points is a function of only one parameter - the price;

3) Using the presented chart, it is possible to calculate a specific numerical value of the quantity of demand Qo for such and such a price Po, which has not yet been established during trading operations.