Decrease in Demand

Definition

A decrease in demand refers to a situation where consumers are willing and able to buy less of a product at every possible price, leading to a leftward shift of the demand curve.

Analogy

Imagine you're running a lemonade stand during summer break. Suddenly, news spreads that there's an alien invasion happening nearby (decrease in demand). People become scared and stay indoors, resulting in fewer customers coming to your stand.

Related terms

Inferior Goods: Inferior goods are products for which demand decreases as consumer income increases. These goods are often seen as lower-quality or less desirable alternatives.

Normal Goods: Normal goods are products for which demand increases as consumer income increases. These goods are typically considered essential or higher-quality items.

Price of Related Goods: The prices of related goods can influence the demand for a particular product. If the price of a substitute good decreases, it may lead to a decrease in demand for the original product.