Question

Explain the law of demand. Explain the factors determining demand.

Answer 1

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 (↑)".[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.

Answer 2

The factors affecting demand of a good are: ... Income of the consumer: When income of the consumer rises, demand for normal good increases while the demand for inferior good decreases and vice- versa , other factors remaining constant.