state and explain the law of demand, what are the assumptions of the law of demand?
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Law of demand states that there is an inverse relationship between change in price of a good and the consequent change in demand for that good assuming that there is no change in other factors influencing the demand for that good. It says when price of a good falls, the demand for that good rises and vice versa.
This law holds for nearly most of the goods and services owing to income and subsitution effect of a change in price. When price of a good falls , real income i.e purchasing power of an individual increase and hence he is able to purchase more (of the same and other goods) with the same income. This is called income effect. Substitution effect is the influence of a reduction in a product’s price on quantity demanded such that consumers are likely to substitute that good for others which have thus become relatively more expensive.
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Law of demand states that there is an inverse relationship between change in price of a good and the consequent change in demand for that good assuming that there is no change in other factors influencing the demand for that good. It says when price of a good falls, the demand for that good rises and vice versa.
This law holds for nearly most of the goods and services owing to income and subsitution effect of a change in price. When price of a good falls , real income i.e purchasing power of an individual increase and hence he is able to purchase more (of the same and other goods) with the same income. This is called income effect. Substitution effect is the influence of a reduction in a product’s price on quantity demanded such that consumers are likely to substitute that good for others which have thus become relatively more expensive.
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Heya user ! here ur answer.
Law of demand state that other things remaining constant there is an inverse relationship between quantity demand and own price of the commodity .
Assumption of law of demand.
1. Taste and preference of the consumer remain constant .
2. There is no change in income of the buyer .
3. Price of related good do not change .
4. Consumer do not except any significant change in the availability of the commodity in the near future .
Law of demand state that other things remaining constant there is an inverse relationship between quantity demand and own price of the commodity .
Assumption of law of demand.
1. Taste and preference of the consumer remain constant .
2. There is no change in income of the buyer .
3. Price of related good do not change .
4. Consumer do not except any significant change in the availability of the commodity in the near future .
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