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Hi friends, see you in your favorite article. In today’s discussion, we will discuss the law of demand, in particular absolute demand. For more details, let’s see the full discussion below.

Market demand is the first step that must be taken in market opportunities, namely estimating the total amount of market demand. According to Kotler (1996: 343), market demand for a product is the amount of goods that will be purchased by certain groups of consumers in certain geographic areas. In a certain period of time, in a certain marketing environment, there are certain marketing procedures.

Definition of Absolute Demand

Demand is the desire of consumers to buy goods at various prices within a certain period of time. To be more accurate, we also include geographic coverage. For example, if you want to buy peppers in the market. The following reads the Law of request:

“If the price of a commodity increases, the quantity of goods needed will decrease, and vice versa, if the price of a commodity goes down, the quantity of goods needed will increase.”

The legal background of demand:

Income effect

Price changes will have an impact on income. This means that with fluctuations in commodity prices, consumers’ actual income can change. Rational individuals respond to both beneficial as well as harmful incentives. If it is profitable, that is, if the price falls, the individual will react to increase the quantity demanded, and if the price increases, the individual will react to reduce the quantity demanded.

Substitution effect of price changes (substitution effect)

The substitution effect explains that changes in the price of goods have an impact on the goods that are substituted. Substitute commodities are commodities that can replace their role as substitute commodities. If the price of a product rises, people will switch to substitute products that do not experience an increase in price.

Absolute Definition

Absolute adjective [abso lut] (adjective)
1) Unlimited; Absolute For example: “The king has absolute power”
2) Complete;
3) Unconditional For example: “The Dutch colonial troops completely surrendered to the Japanese occupation forces”
4) No doubt; right, For example: “Of course, his participation in the incident was absolute.”

You can definitely refer to the following:

  • It can be interpreted as absolute, from English, absolute.
  • Autocratic monarchy, a term used in government, is the hallmark of an autocratic monarchy, the leader has absolute power and is not limited by the constitution or laws.
  • Absolute value, used in mathematics to represent the value of a number regardless of its sign (always positive).

Demand based on purchasing power:

Absolute Request

Effective requirements

Effective demand is one of the demands for goods and services that accompany purchasing power. In this type of demand, the consumer clearly needs the goods, and he has the ability to buy or pay.

Absolute requirement (Absolute Request)

Absolute or absolute demand is the demand for goods or services that do not use consumer purchasing power. We can say that under absolute demand these consumers do not have the money or the ability to buy what they want. One example of a request is when Ani wants to buy roller skates, but she doesn’t have enough money to buy them. Therefore, Ani’s desire to buy roller skates could not come true.

Potential demand

Potential demand is a demand for goods or services that accompanies purchasing power, but consumers still consider the transaction. For example, Pak Aji actually has enough money to buy a car, but he has no desire to buy a car.

Latent demand is a demand that is not always supported by people’s purchasing power. The potential sources of demand are employees of TELKOM, BRI, Bank Jatim and other agencies, around the Islamic Boarding School and the people of Jombang who are assumed to be souvenirs for guests from related agencies or communities and souvenirs for local tourists.

Supposition: With the increasing workforce and economic growth in the Jombang area, UD Jenang Kelapa Muda’s objective is potential demand in the second year from 2004 to 2008 assuming a community income of IDR 750,000.

Absolute Request According to experts

According to William A. Mike Ethan (William A. If you look at the condition of the building is not good. The alleys in this place are not blocked, and the curved roof guarantees that it will leak if it rains, but why would consumers come and take part in the chaos and How dirty Pecchin’s Mart is? The answer is because Pecchin’s Mart has complied with the rules of well-known merchants for thousands of years, which is the cheapest price compared to other stores.

From the information above, we can see that even though market conditions are not very good, the demand remains the same. Is that an absolute request? Absolute demand is demand that is not supported by purchasing power, but is more of wishful thinking. Everyone can have absolute needs.

Request In accordance with the terms of the transaction amount:

Individual request

The definition of personal needs is one of the needs for goods or services with the same purchasing power, but consumers still pay attention to the transaction. For example, a boy is buying chicken and vegetables for lunch with his family

Potential demand

The definition of potential demand is one of the requests for goods or services that accompany purchasing power, but consumers still pay attention to the transaction. One example is Mr. Andy, he actually has enough money to buy a TV, but he has no desire to buy it yet.

Group requests

Understand that group needs are the requirements of a group of people or communities for goods or services occurring at the same time.

Factors affecting Absolute Demand

Absolute Request

There are several factors that can affect the demand for goods, namely:

  • The price of the product itself.
  • The price of other items to be bound.
  • Per capita income level.
  • Total population.
  • Future price forecast.
  • Income distribution.
  • The producers’ efforts have increased sales.

Absolute Demand Conclusion

Predicting (forecasting) the demand for a product and its parts in the future is very important in planning and monitoring production. Good predictions are essential for the efficiency of production and production operations. Forecasting or forecasting is an activity that predicts what will happen in the future.

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Post Author: Rachel Reinbauer

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