Aims and Objectives of Law of Demand
Answers
The law of demand states that with all factors remaining constant,the higher the price of a product goes, the lower the demand.
In businesses, this law is important when it comes to the pricing of products. Manufacturers and retailers know that the higher they price they products, the lower the quantities that they will sell.
It also helps government set taxes on commodities. Additional could taxes on basic goods could lead to their increase in price hence most people will not afford them. On the other hand taxes will increase the cost of doing business reducing investments into the economy.
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This study is known as demand analysis which serves the following objectives:
(1) It aids in forecasting sales and revenues. ...
(2) It provides basis for appraising salesman's performance and for setting his sales quote.
(3) It is also used to match the competitive strength of a business unit.