economics questions law of demand
Answers
In Microeconomics,law of demand states that as the price or market value of any normal good or service increases,the demand for that particular good or service decreases consequently and vise versa.
Explanation:
In consumer theory,law of demand states the inverse relationship between price of any particular commodity or service and its consumer demand,implying that consumer demand decreases as the commodity/service price increases and vise versa.Law of demand explains a significant aspect of consumer psychology in general.As the consumer increases consumption of any particular good/service,the marginal or additional utility of that good/service to the consumers falls and as a result its value to the consumer also declines.Hence,the willingness to pay of the consumers for the particular good/services decreases as the utility or satisfaction level obtained from the consumption also falls increasingly as the level of purchase increases.This whole idea is embedded in the law of diminishing marginal utility for any good/service which is the fundamental essence of law of demand.