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Why we purchase more units when price decreases and vice versa?

As per Alfred Marshall, the law of Diminishing marginal utility states that by consuming more and more units of a particular commodity the marginal utility obtained from every additional unit goes on falling. A consumer in order to maximize his satisfaction will buy that number of units of commodity at which its price and marginal utility are equal. Therefore since Marginal utility from every additional unit goes on falling as we go on consuming more and more. The consumer will be ready to buy move at less price

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Reasons for change in demand ,why we purchase more unit when price decreases and vice versa:-

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Price effect: It means change in demand due to change in price. It has two effects.

 Substitution effect: In case of substitute goods like tea and coffee if the price of tea decreases people will buy more units of coffee it is called substitution effect. Means that consumer buys relatively cheaper commodity for the other good which is relatively expensive.

Income effect: The effect of change in the price of the commodity, on the income of the consumers is called real income, is income effect. For example, fall in the price results in more purchase or more purchasing power which allows the consumer to demand further more units of the commodity.

Thus due to price effect and its components, substitution effect and income effect quantity demanded of commodity increases with the fall in the price of the given commodity and vice versa provided other things remain constant.

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