define law of demand. discuss its assumptions and factors affecting demand

law of demand states that their is an inverse relationship between the quantity of the commodity and the price paid to accquire it.

assumptions-

price of goods remains constant.

income of consumer remains unchanged.

taste and preferences remains same.

all units are homogeneous

commodity shaould be normal good.

  • 3

LAW OF DEMAND STATES THAT OTHER THINK REMANING CONSTANT, THERE EXIST AN INVERSE RELATIONSHIP BETWEEN PRICE AND DEMAND OF THE COMMODITY. 

ASSUMPTIONS:-

1. CONSUMER IS RATIONAL

2. OTHER FACTORS ARE CONSTANT.

3. THERE IS NO SUDDEN CHANGE IN HABITS AND FASHION.

  • 3

 OTHER DETERMINANTS OF DEMAND REMAINING CONSTANT A LARGER QUANTITY IS DEMANDED AT A LOWER PRICE THAN AT A HIGHER PRICE

IN SIMPLE WORDS, OTHER THINGS REMAINING THE SAME, DUE TO FALL IN PRICE MORE QUANTITY IS DEMANDED AND VICE A VERSA... :)

  • -1
What are you looking for?