EXPLAIN THE LAW OF Demand?


Meaning: -The Law of demand establishes the functional relationship between the Price of a commodity and the quantity of that commodity demanded at different prices, assuming other factors remaining constant.

When the price of a commodity rises, demand for it falls and when the price of the commodity falls, demand rises. So less quantity is demanded at higher prices and more quantity is demanded at lower prices. There exist inverse relationship between price and quantity demanded of a commodity.

Definition: -According to Marshall the law of demand, is defined asOther things being equal, the quantity of a commodity demanded varies inversely with its price.”

Symbolically, the Law of demand can be expressed as follows:

Dx = f (Px)
Where, D = stands for the demand for commodity X
             X stands for the commodity demanded
             F stands for function of
             Px stands for the price of the commodity X


            We can explain this law with the help of a schedule and a diagram.

Price (Rs.)
Quantity Demanded
1
2
3
4
5
50
40
30
20
10
           
The Schedule shows that with an increase in Price the quantity demanded is decreasing. It indicates inverse relationship between the two variables price and quantity demanded. When the price is Re. 1 the consumer demand 50 units and when the price rises to Rs. 5 he demands the least that is 10 units. 



In the above diagram X-axis represents quantity demanded and Y-axis represents price. Various points from the schedule are plotted on the graph, joint those points we will be getting demand curve. DD is the demand curve which slopes downward from left to right indicating inverse relationship between price and Quantity demanded. This happens when the price is more, demand is less and when price is less, and demand is more.