An individuals demand for a commodity depends on various factors, such as, the hurt of the commodity, the consumers income, the value of related (i.e. complementary and substitute) goods, tastes and preferences of the consumer, etc.
Usually, when the prices of the commodities fall, consumers are tempted to purchase to a greater extent, and when the prices rise, the measuring demanded decreases. on that point is, thus, an inverse relationship between the price of the product and the quantity demanded. The economists have named this inverse relationship between demand and price as the law of demand.
The law of demand states that consumers buy more of a good when its price decreases and less when its price increases (ceteris paribus ), other factors affecting demand kept constant. That is, if the income of the consumer, prices of the related goods, and tastes and preferences of the consumer remain un commuted, the consumers demand for the good will move opposite to the social movement in the price of the good.
The law of demand wad be graphically depicted by a downward diagonal demand curve:
The graph clearly shows that at a higher price (P1), the quantity demanded is less (Q1). When price travel (P2), the quantity demanded increases (Q2), and so on.
ELASTICITY OF DEMAND
What is Elasticity?
Literally, cracking means flexibilty. In economics, elasticity is measure of responsiveness of dependent variable to the change in independent variable. It is expressed as the ratio of the percentage change in dependent variable to the percentage change in independent variable.
What is Elasticity of Demand?
Elasticity of demand can be defined as the degree of responsiveness of demand(dependent variable) to changes in factors affecting demand (independent variable).
The factors affecting demand here could be -...If you want to get a full essay, order it on our website: Orderessay
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