Question

explain the law of demand? derive the market demand curve.10mark




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Answer 1

Answer:

In microeconomics, the law of demand states that, "conditional on all else being equal, as the price of a good increases (↑), quantity demanded decreases (↓); conversely, as the price of a good decreases (↓), quantity demanded increases (↑)".[1] In other words, the law of demand describes an inverse relationship between price and quantity demanded of a good. Alternatively, other things being constant, quantity demanded of a commodity is inversely related to the price of the commodity. For example, a consumer may demand 2 kilograms of apples at $70 per kg; he may, however, demand 1 kg if the price rises to $80 per kg. This has been the general human behaviour on relationship between the price of the commodity and the quantity demanded. The factors held constant refer to other determinants of demand, such as the prices of other goods and the consumer's income.[2] There are, however, some possible exceptions to the law of demand, such as Giffen goods and Veblen goods.

A graph, with quantity on the X-axis and price on the X-axis. A red curve sloping downwards from left to right, labeled D, intersects a blue curve sloping Howard's from left to right, labeled S. The D curve is shifting to the right.

Answer 2

Law of demand is defined as “quantity demand of product decreases if the price of the product increases.” That is if the price of the product rises then the quantity demand falls. Because the opportunity cost of consumer increase which leads consumers to go for any other alternative or they may not buy it. The law of demand and its exceptions are really interesting concepts with many real-life applications.

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