What is law of demand? what will be the impact on demand due to increase in price of the substitute goods? explain with the help of a diagram.
Answers
Explanation:
ECONOMICS MICROECONOMICS
Law of Demand
By JIM CHAPPELOW
Reviewed By BRIAN BARNIER
Updated Mar 27, 2020
What is the Law of Demand?
The law of demand is one of the most fundamental concepts in economics. It works with the law of supply to explain how market economies allocate resources and determine the prices of goods and services that we observe in everyday transactions. The law of demand states that quantity purchased varies inversely with price. In other words, the higher the price, the lower the quantity demanded. This occurs because of diminishing marginal utility. That is, consumers use the first units of an economic good they purchase to serve their most urgent needs first, and use each additional unit of the good to serve successively lower valued ends.
Answer:
The law of demand states that other factors being constant (cetris peribus), price and quantity demand of any good and service are inversely related to each other. When the price of a product increases, the demand for the same product will fall.
Substitutes are goods where you can consume one in place of the other. The prices of complementary or substitute goods also shift the demand curve. ... When the price of a substitute good decreases, the quantity demanded for that good increases, but the demand for the good that it is being substituted for decreases.
Your diagram is in the Attachment ☝️
hope it helps u..!!
