Law of Demand
The Neo-classical economist ,Alfred Marshall propounded the law of demand in the book “principle of economics” in 1990 .It is one of the well-known and most applied law in microeconomics . The law is based on the functional relationship between price and quantity demanded for the goods and services .
The law of demand states that of other things remaining the same , where price rises then quantity demand falls and vice-versa . Thus there is inverse relationship between price of commodity and quantity demanded of a commodity . If other things remaining the same symbolically it is written as following form
where, D =Demand
The law of demand is based on following assumptions
- No change in income of the consumer
- No change in consumers taste and preference
- No change in price of complement and substitute goods
- No change in technology
- No change in size of production
Based on above table assumption , law of demand is explained by the following demand schedule
Table no. 1 Law of demand schedule
|Price of commodity (In Rs/kg)||Quality demand (In Kg)|
In the above table when price is Rs 10 then quantity demanded is 50 kg . Where price increase to 20 to 50 kg then quantity demand falls from 40 kg to 10 kg . In this table price of commodity and quantity demand has opposite relationship . Therefore the above table shows the law of demand .
In the above figure x axis measures quantity demanded and Y axis measures price of commodity when price is Rs 50 quantity demanded in 10 kg and the when price is Rs 10 quantity demand is 50 .