Features of Law of Demand Inverse relationship Price is independent variable and demand is a dependent variable Others things remaining same Related with time . Law of Demand states that amount demanded increases with a fall in price and diminishes when price increases. others things being equal.Meaning of Demand Law of Demand According to Marshall.

Explanation of Law of Demand ‡ Demand schedule Individual Demand schedule Market Demand schedule .

Demand Curve 1) Individual Demand Curve 2) Market Demand Curve .

Why does curve slope downward 1) Law of Diminishing Marginal Utility 2) Income Effect 3) Substitution Effect 4) Different Uses 5) Size of Consumer Group .

Exceptions to the Law of Demand 1) Articles of Distinction or Veblen Goods 2) Ignorance 3) Giffen Goods 4) Expectation of Rise or Fall in Price in Future 5) Consumer·s Psychological Bias or Illusion 6) Necessaries of Life .

Exceptions to the Law of Demand 7) Commodities with Special Brand and Trade Mark 8)War or Emergency 9)Small Part of Total Expenditure .

Determinants of demand or demand function 1)Price of commodity:- .

Determinants of demand or demand function 2) Price of related goods:a) Substitute goods b)Complementary goods 3) Income of consumer:a) Normal goods b) Inferior goods c) Necessaries of life 4) Tastes and preferences 5) Expectations .

6) Size and consumption of population 7) Distribution of income 8) General standard of living and spending habits of people 9) Level of taxation 10)Climate conditions 11)Customs 12)Advertisement .

Change in quantity demanded and change in demand 1)Change in quantity demanded or movement along the demand curve:a) Extension of demand b)Contraction of demand 2)Change in demand or shift in demand curve:a)Increase in demand 1)Same price. Same demand . more demand 2)More price.

‡ B)Decrease in demand:1)Same price. less purchase 2)Less price. Same purchase .

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