Today we will discuss about concept and assumption of law of demand. First, let us discuss about concept of demand.
Concept of Law of demand
The law of demand states that other things being equal, quantity demanded increases with the decrease in own price of the commodity and vice versa. There is a inverse relationship between quantity demanded and its own price, keeping other things equal. The other thing means all other demand determinants or demand functions except price.
The above demand schedule shows that if the price increases quantity demanded decreases and if price decreases the quantity demanded will rise. The same is shown in the above table.
Assumption of law of demand:
- Income of the consumer remains constant.
- Price of related goods remains constant.
- Taste and preference of the consumer will remain same.
- No change in the future expectations of the consumers.
This is all about concept and assumption of law of demand.