Law of demand
There is an inverse relationship
between quantity demanded and its
price. The people know that when
price of a commodity goes up its
demand comes down. When there is
decrease in price the demand for a
commodity goes up. There is inverse
relation between price and demand .
The law refers to the direction in which
quantity demanded changes due to
change in price.
A consumer may demand one dozen
oranges at $5 per dozen . He may
demand two dozens when the price is
$4 per dozen. A person generally buys
more at a lower price. He buys less at
higher price. It is not the case with one
person but all people liken to buy more
due to fall in price and vice versa. This
is true for all commodities and under
all conditions. The economists call it
as law of demand. In simple words
the law of demand states that other
things being equal more will be
demanded at lower price and lower will
be demanded at higher price.
1. Alfred Marshal says that the
amount demanded increase with a
fall in price, diminishes with a rise in
2. C.E. Ferguson says that
according to law of demand, the
quantity demanded varies inversely
3. Paul A. Samuelson says that law
of demand states that people will
buy more at a lower prices and buy
less at higher prices, other things
remaining the same.
Assumptions of the law
1. There is no change in income of
2. There is no change in the price
3. There is no change in quality of
4. There is no substitute of the
5. The prices of related
commodities remain the same.
6. There is no change in customs.
7. There is no change in taste and
preference of consumers.
8. The size of population remains
9. The climate and weather
conditions are same.
10. The tax rates and other fiscal
measures remain the same.
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