Define demand its charactaristics laws and expectations
Answers
Law Of Demand:
According to The law of demand states that all other things being equal, the quantity bought of a good or service is a function of price. As long as nothing else changes, people will buy less of something when its price rises. They'll buy more when its price falls. it can be explained by demand schedule and demand curve.
Demand schedule:-when the relation between price and quantity demanded is shown in a tabular form.It is known as demand schedule
Demand curve:-The demand curve plots those numbers on a chart. The quantity is on the horizontal or x-axis, and the price is on the vertical or y-axis.
Exceptions to The Law of Demand – Giffen Goods
There are two exceptions to the Law of Demand. Giffen and Veblen goods are exceptions to the Law of Demand. However, they are extreme cases and can be quite difficult to prove. But economists generally agree that there are rare cases where the Law of Demand is violated.
A Giffen good is considered to be an exception to the Law of Demand. The unique features of a Giffen good results in quantity demanded increasing when there is an increase in price. As stated earlier, the Law of Demand states that the quantity demanded should decrease with an increase in price (the inverse relationship). Sir Robert Giffen observed that when the price of bread increased, the low-paid British workers in the early 19th century purchased more bread and not less of it. This phenomenon is a direct contradiction to the Law of Demand.
Exceptions to the Law of Demand – Veblen Goods
The other exception to the Law of Demand is associated with the name of the economist, Thorstein Veblen who propounded the doctrine of conspicuous consumption. Veblen suggested that some people viewed higher utility in higher priced goods.
Veblen goods are generally more visible in society than Giffen goods. For example, economists often view diamonds as a Veblen good because of the higher prestige value of a diamond; the higher is the desirability. Some people will also buy fewer diamonds when the price falls.
They are goods that people buy more of when or if the price increases. These goods tend to be status symbols and displays of wealth. For example, Rolls Royce cars and Patek Phillipe watches can be considered to be Veblen goods.
"" Definition of demand...
--- Demand refers to different possible quantities that a consumer is ready to purchase at different possible prices....
"" Characteristics of demand...
-- Demand is effected by the taste and preferences of the consumer...
-- Demand gets effected by the income level of the consumer...
"" Law of demand....
Law of demand States that, other thing remaining constant then there is a inverse relationship between own price and the quantity demanded of a commodity....
"" Exceptions of law of demand...
-- Goods of social distinction..
These goods are demanded by rich people to show them rich ,, if their price fall they will not purchase it and demand falls....
-- Giffen goods....
These goods are highly cheaper already ,if more fall on price occur, consumer think that these are not good for health and not buy these...
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