SAUMYA RANJAN MISHRA MFC- 2011-13

DEFINITION
According to the law of demand, other things being equal, if the price of the commodity falls, the quantity demanded of it will rise, and if the price of the commodity rises, its quantity demanded will decline.

1. Individual Demand Schedule 2. Market Demand Schedule

Price Demand 50 10 40 20 30 30 20 40 10 50

50
40

30
20 10 10 20 30 40 50

demand

INDIVIDUAL DEMAND SCHEDULE

Y

Price Demand 50 10 40 20 30 30 20 40 10 50

50 40 30

20

10
10 20 30 40 50

demand

MARKET DEMAND SCHEDULE OF D1

Price 5 4 3 2 1 D1 3 4 5 6 7 D2 4 5 6 7 8 D3 5 6 7 8 9
Y
5 4 Price 3 2 1 3 4 5 6 7 D D

Demand

Y
D 5 4 3 Price 2 1 D 4 5 6 7 X

Demand

Y 5 4 Price 3 2 1

D 5

6 Demand

DEMAND CURVE
The demand curve is always in a downward sloping as seen in the above figures.

CAUSES OF DOWNWARD SLOPING DEMAND CURVE

Law of diminishing marginal utility. Multiple uses of goods. Taste and preferences of people. Income effect. Substitution effect.

EXCEPTIONS TO THE LAW OF DEMAND

Giffen goods. P D Conspicuous Consumptions. P D High value goods. P D P D Expectations. P D