Question

How do humans respond to price? How does this relate to the study of economics?

Answer 1

Observing human judgement when responding to price is almost inverse to Economic's Law of Supply and Demand. If the price is relatively lower, people will tend to buy more items or in bulk. If it is more expensive, lesser quantity will be purchased. For the Law Supply and Demand, the independent or affecting factor is the demand or the quantity of goods and services purchased. The demands sets the market price of goods or services. The higher the demand, the higher the demand, the higher the market price is.