Introduction:

The Law of Demand is a fundamental principle in economics that describes the relationship between the price of a good or service and the quantity demanded by consumers, assuming that other factors remain constant. The law is based on the observation that, all else being equal, as the price of a good or service decreases, the quantity demanded increases, and conversely, as the price increases, the quantity demanded decreases. Features of the law of demand are like backbone of the law of demand.

According to Prof. Marshall, “The greater the amount to be sold, the smaller must be the price at which it is offered in order that it may find purchases or in other words, the amount demanded increases with a fall in price and diminishing with a rise in price.’

According to Samuelson, Law of demand states that people will buy more at lower prices and buy less at higher prices. Other things remain constant.

Symbolically, D=F [P] where D represents Demand, P stands for price and F denotes the functional relationships. The law explains the causes and effect relationship between independent variable and dependent variable and. The law explains only the general tendency of consumers while buying of a product. It is condition in nature.

Features:

1. Inverse Relationship: The Law of Demand states that there is an inverse relationship between the price of a good and the quantity demanded by consumers. When the price goes up, quantity demanded goes down, and vice versa.
2. Ceteris Paribus: The law assumes that other factors affecting demand, such as consumer income, preferences, prices of related goods (substitutes and complements), and expectations, remain constant. This is expressed by the Latin term “ceteris paribus,” meaning “all other things being equal.”
3. Downward-Sloping Demand Curve: The law is often graphically represented by a downward-sloping demand curve. The vertical axis represents the price, and the horizontal axis represents the quantity demanded. As price decreases, the quantity demanded increases, resulting in a negative slope.
4. Substitution Effect: The substitution effect plays a role in the Law of Demand. As the price of a good decrease, it becomes relatively more attractive compared to other goods, leading consumers to substitute it for more expensive alternatives.
5. Income Effect: The income effect is another factor influencing the Law of Demand. When the price of a good falls, consumers effectively experience an increase in real income, allowing them to buy more of that good.
6. Exceptions and Giffen Goods: While the Law of Demand is a general principle, there can be exceptions. For example, Giffen goods are rare cases where an increase in price leads to an increase in quantity demanded. This is typically observed with inferior goods in specific circumstances.

ASSUMPTIONS OF THE LAW:

1. Tastes and preference, customs, habits of consumers should remain constant.
2. Price of related goods should not undergo change.
3. Income o consumers should remain the same.
4. No new substitutes should be discovered.
5. Consumers should not anticipated change in prices.
6. Goods should not have prestige value.
7. No change in govt policy Etc.

The law of demand is represented through demand schedules and graph.. They summarize the information on prices and quantities demanded. The demand schedule can be the individual demand schedule and it can be presented as follows.

PRICE OF COMMODITY IN Rupees	QUANTITY OF COMMODITY IN Kgs.
40	5
30	10
20	15
10	20

A demand curve shows various alternative prices and quantity combinations. It represents the functional relationship between quantity demanded and prices of a commodity. Demand curve has a negative slope downward to the right. The negative slope of the demand curve clearly indicates that quantity demanded goes on increasing as the price falls and vice-versa.

also read: explain the law of diminishing marginal utility?