LAW OF DEMAND

The law of demand is an economic law that

states that consumers buy more of a good
when its price decreases and less when its
price increases with other things the same.

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 Law of demand
It states that other things constant, when the price of
a commodity rises, the demand for that commodity
falls and when the price of a commodity falls,the
demand for that commodity rises.

In other words

“Demand for a product is inversely proportional to

its price.”

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 LAW OF DEMAND

Price ( in Rs) Quantity

Demanded(in
numbers)

5 20

10 10

20 5

25 4

50 2

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LAW OF DEMAND

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LAW OF DEMAND

Law of demand

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 Law of supply
What Does Law Of Supply Mean?

When other factors being equal, as the price of

a good or service increases, the quantity of
goods or services offered by suppliers
increases and vice versa.

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 LAW OF SUPPLY
The law of supply states that other things
remaining the same,the higher the price of a
commodity the greater is the quantity supplied.

Price of the product revenue to the supplier.

Therefore higher price means greater revenue

to the supplier and hence greater is the
incentive to supply.
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 LAW OF SUPPLY

The law of supply states that other

things remaining the same,the higher
the price of a commodity,the greater
is the quantity supplied.

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 SUPPLY SCHEDULE

PRICE( Rs. Per cup) SUPPLY(“000 cups per month)

15 10

20 15

25 30

30 45

35 60

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LAW OF SUPPLY

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 LAW OF SUPPLY

The law of supply states that other things

remaining the same,the higher the price of a
commodity the greater is the quantity supplied.

Price of the product revenue to the supplier.

Therefore higher price means greater revenue
to the supplier and hence greater is the
incentive to supply.

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 ELASTICITY OF DEMAND
The concept of elasticity of demand is generally associated
with the name of Alfred Marshall.
1.The law of demand is a qualitative statement of the
relationship between the price of a commodity and its
quantity demanded by the consumers.

2.The law of demand does not specify any

quantitative relationship between the two magnitudes
i.e., between price and the quantity demanded. In
economics we say that the demand for certain
commodities are more elastic than the demands for
other goods. 12
 ELASTICITY OF DEMAND
definition :

“Elasticity of demand is, therefore a

technical term used by the economist to
describe the degree of responsiveness of
the demand for a commodity to fall in its
prices”

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 TYPES OF ELASTICITY OF DEMAND
There are three types of elasticity of demand

1.Price Elasticity of demand

2.Income elasticity of demand
3.Cross Elasticity of demand

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 TYPES OF ELASTICITY OF
DEMAND
1 .Price Elasticity of Demand:
It is the ratio of percentage change in the
quantity demanded of a commodity to a given
percentage change in its price.
Percentage change in qty
demanded
Price elasticity of demand =
……………………………………………………………..
Percentage change in price

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