Show that demand of a commodity is inversely related to its price. Explain with the help of utility analysis.
Answers
demand in the first place is the quantity of commodities consumers are willing and able to buy at a particular price and time.therefore the more the quantity demanded the lesser the price since many people will be willing to buy a due to a lesser price fixed to the good hence lead to the first law of demand/supply which states that more is demanded at a lesser price than at a high price.this can be explain bellow.
e.g a bottle of cold water during a sunny day
bottle of water satisfaction in utils
1 10
2 8
3 6
4 4
5 2
this gives us an inverse relationship between the quantity of water and the satisfaction derived from it hence leads to the law of demand