Out of experience it is seen that people hurry to buy it more at lower price and less at high price. This common tendency is expressed by the law of demand. The law of demand expresses the functional relationship between price and commodity demanded.

The law of demand states the inverse relation that comes to exist of between price in one hand and quantity demanded on the other. The law of demand portrays that demand is the function of price.

Statement of the law:-

The law of demand states that other things remaining constant, a fall in price causes quantity demanded to rise and a rise in price causes quantity demanded to fall. These other things which are held constant are the taste and preferences of the consumer, the income of the consumer and the prices of related The inverse function i.e. the indirect price quantity relation not hold good if these other factors undergo a change with the change in price.

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According to Prof. Samuelson, “Law of demand states that people will buy more at lower price and buy less at higher prices, other things remaining the same.” In the words of Ferguson “Law of demand states that the quantity demanded varies inversely with price”. Thus the constancy of other factors and inverse price-quantity relation are important qualifications of the law of demand.

Explanation of the Law:-

The law of demand can be explained through a demand schedule and a demand curve. A demand schedule expresses-the response of amount demanded to changes in price of a commodity.

A demand schedule is the tabular statement of quantity demanded of a commodity at different hypothetical prices. It depicts the information on prices and quantity demanded. The demand schedule is of two type’s viz. individual demand schedule and market demand schedule. An individual demand schedule reveals the reaction of an individual consumer towards different amounts of a commodity at their corresponding prices. A market demand schedule is the combination of different individual demand schedules in the market at a given price in a given period of time. The individual demand schedule expresses the indirect relation that exists between price and quantity demanded.

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Assumptions of the Law:-

1. Habits, taste and preference of the buyer must not change.

2. Consumer’s income should remain unaltered.

3. The size of the population should not change.

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4. The prices of the other related commodity should remain the same.