Demand and Utility Essay Example | Topics and Well Written Essays - 500 words

Demand and Utility - Essay Example If to look at the demand of expensive houses, demand is affected by the situation on the stock markets - if people do not have the need to buy another house, they would consider the option of investing the money into real estate or stock market to gain the profits in the short term. If the consumer wants to get the long term profits, he would invest into luxury products and the demand will go up. The decreased demand leads to the decreased supply of the luxury goods and increased supply of the goods aimed at middle-income people. As the result, the companies tend to introduce products that are more innovative and cheaper. The luxury goods are still desired, but less demanded and less purchased. However, when people buy luxury goods as the mean to show their social standing, the supply will not be affected because the demand stays the same as well. Looking at the never decreasing supply of the luxury high-end clothes, it is possible to say that the supply of expensive cloth will never go down and it is not affected by any economic factors. The demand of luxury electronics depends on the desire of potential customers to change their old devices on the new as well as on the price of the new devices.