Law of Demand

It is a general experience that demand for a commodity is more at lower price than at a higher price. There is inverse relationship between price and quantity demanded. This inverse price-demand relation is known as the law of demand. Hence, the law of demand shows the direction in which quantity demanded changes with a change in price.

In Marshall's words,"The amount demanded increases with a fall in price, and diminishes with a rise in price."

In the words of Prof. Samuelsion, "Law of demand states that people will buy more at lower prices and buy less at higher price, other things remaining the same."

The phrase 'other things remaining the same' points towards certain important assumptions on which this law is based. These assumptions are:

• No change in income of the consumer;


• No change in the price of related goods;


• No change in the taste, nature and fashion of the consumers;


• No change in climate and season;


• No change in size and composition of the population;


• No exception of further changes in the price of the commodity.

Given these conditions, the law of demand can be explained with the help of table and diagram. It must be remembered that the law of demand is always expressed through market demand schedule and market demand curve.