In economics, the amount of a good or service that customers will purchase is called demand. Demand is not only the consumer's desire to own but also their ability to purchase the item. For this reason, price plays a significant role in the demand for a product. When the price of a good is higher, people may be less willing to buy the product. Additionally, a larger group of people may not be able to afford to purchase at a higher price. For this reason, high prices mean lower demand for a good or service.
For some products, the price does not have an effect on demand. These goods are said to have inelastic demand. Gasoline is an example because it is a commodity that is so important to the consumer that demand will not be affected at higher prices.
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