Economics for law

1. LAW OF DEMAND

2. What is Law Of Demand?
 “ The amount demanded increases with a fall in price and diminishes with a rise in
price”
 Bilas says “The law of demand states that ,other things being equal , the quantity
demanded per unit at time will be greater , lower the price and smaller , higher the
price”
 Samuelson says “People will buy more at lower prices and buy less at higher prices
, other things remaining the same”

3. Assumptions Of Law
 No change in taste and preferences of the consumer
 Consumer’s income remain constant
 No change in the wealth of the consumer
 No anticipatory changes in the price

4. Exceptions Of Law
 Giffen Goods
 The expectation of Price Change
 Necessary Goods and Services
 Change in Income
 Demonstration effect

5. Demonstration effect – Law Of Demand
 If consumers are affected by the principle of conspicuous consumption or
demonstration effect, they will like to buy more of those commodities which
confer distinction on the possessor, when their prices rise. On the other hand, with
the fall in the prices of such articles, their demand falls, as is the case with
diamonds.