The law of Demand

1. LAW OF DEMAND

2. • The law of demand explain the relationship
between the price and quantity demanded of a
commodity. Assuming other factors affecting
the demand to be constant. Aacording the
law,"other things beings constant, quantity
demanded of a commodity is inversely related
to the price of the commodity.
• Price and demanded move in the opposite
direction. In the the other word, when price
of commodity raise, demand falls and when
The law of demand

3. • Law of demand holds good when"other things
remain the same ." It means factors
influencing demand, other than price, are
assumed to be constant. These may be
explained with the help of following demand
function.
Here,Dx = Demand for commodityX; PX=
Price of X commodity, Pr =Price of other (
Assumptions
DX = f ( Px Pr, Y, T, E)

4. • There should be no chabge in the price of
related goods.(Pr)
• There should be no change in the income of
the consumer.(Y)
• There should be no change in the tastes and
preferences of consumer.(T)
• The consumer does not expect any change in
the price of the commodity in the near
Assumption of the law of demand are that all
the determinants of demand other than the PX
remain unchanged. In detail these are that:

5. Price of product
(Potatoes)
Quantity of product (kg)
10 4
20 3
30 2
40 1Price (increases). Demand ( falls)
Price ( falls). Demand ( increases)

6. Factor affecting market demand
•
PRICE OF RELATED GOODS
Substitute goods.
Complementary
goods

7. SUBSTITUTE GOODS
• Substitute goods are those goods in which one
goods can be used in placed of another is
called substitute goods.
Price ( coffee)increases. Quantity
(tea)increases
Price (coffee) falls. Quantity
(tea)increases
They have positive relationship between price
and demand. If the coffee price (↑) the quantity

8. Substitute

9. COMPLIMENTARY GOODS
• Complimentary goods : It is those goods
which is related to other good for e.g car
& petrol.
*complimentary goods are pair of goods
which are use together to satisfied a given
bond
Price(petrol)increase. Quantity (car)falls
Price(petrol) falls. Quantity
(car)increases

10. COMPLEMENTRY

11. INCOME OF THE CONSUMER
• (Driect Relationship) generally higher the
incom, the larger will be the demand.The
effect of change in income on a consumer's
demand depands upon the nature of good
whether the normal or an inferior goods.
INCOME OF CONSUMER
NORMAL GOODS

12. NORMAL GOODS
• Generally an increases in the money income of
a consumer (or household) increases the
demand for a normal good and a falls in
income reduce the demand.
Income(increase) : Quantity
demand(increase)
Income(falls) : Quantity demand(falls)
They have positive (Direct) relationship.

13. INFERIOR GOODS• An increases in income generally ready to fall
in demand for an inferior good becouse a
household can how afford to buy a normal
goods.
Income (Increases) : Quantity demand (falls)
Income (falls). : Quantity demand (
increases)

14. Taste & Preference Of The
Consumer
• Teste & prefernce of the consumer:
(Direct relationship) Demand for a
commodity is directly related to the
taste, preference and habits of the
consumer. Demand develop
favourable taste. A change in
preference also affects to demand.

15. • Thankyou
For
listening
Made by : Praveen thakur
Roll. No. : 168019
B.B.A 1st semester