Law Of Demand

Question 1

Statement of law .”

Answer 1

According to Prof. Alfred Marshall, “Other things being equal, higher the price of a commodity, smaller is the quantity demanded and lower the price of a commodity, larger is the quantity demanded

Question 2

Assumptions

Answer 2

Constant level of income
No change in size of population
Price of substitute good remain constant
Price of complementary good remain constant
No expectations about future changes in Price
No changes in taste, habits, preference, fashion
No change in taxation policy

Question 3

Exceptions

Answer 3

1. Giffens paradox/ Inferior goods
2. Prestige goods
   3.Speculation
3. Price Illusion
4. Ignorance
5. Habitual goods