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LAW OF DEMAND

law-of-demand
law-of-demand

In microeconomics demand is the quantity of a good that a consumer can purchase at a specific period. The relationship between price and demand of a good is inversely proportional to each other. If the price of a good increase it’s demand gradually decreases or vice versa.The relationship between the price and demand is also termed as the demand curve.


DEMAND CURVE

In economics the demand curve is a graphical representation between the price of a certain commodity is on the y-axis and the quantity of that commodity that is demanded at that price is on the x-axis. The graph shows the law of demand, which states that if the price increase the consumer quantity demand decreases and vice versa.

FACTORS AFFECTING DEMAND

law of demand and supply
law of demand and supply

Numerous factors affect the buyer’s ability to buy a good.

1- GOOD’S OWN PRICE

The demand relationship between price and quantity of the good that can be purchased at that price. An increase in price will create a decrease in quantity demand that forms a negative relationship. This negative relationship entered in the downward slope of the consumer demand curve.For example, if the price of 1kg Apple’s rose from 70 rupees to 85 rupees this is a big price increase. This increase in price causes a decrease in consumer quantity demand at rupees 85 because the new price is very unreasonable and more expensive for 1kg Apples.

2- POPULATION

If the population of any country grows rapidly the quantity demand will also increase following the need of people of that country.

3- NATURE OF THE GOOD

If the good is of the basic commodity its demand goes on high. All facts that a buyer finds related to its ability or need to buy a good effect on the demand rate. For example, if a person is at the risk of sunburn in his outdoor activities is more likely to buy a sunblock than an ordinary cream.

4-PRICE DEMAND

Price demand refers to the different quantities of the different commodity which will be purchased by a consumer at a given time and specific price.

TYPES OF DEMAND

There are the following different important types of demand.

  • 1- Price demand
  • 2- Cross demand
  • 3- Direct demand
  • 4- Indirect demand
  • 5- Income demand
  • 6- Joint demand
  • 7- Composite demand

Written by Anna

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