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Law of demand

As per prof. Alfred Marshall “The greater the amount to be sold, the smaller must be the price at which it must be offered in order that it may find purchasers or in other words the amount demanded increases with a fall in price and diminishes with a rise in price”.
The law of demand explains the functional relationship between price of a commodity and its quantity demanded. It states that other things being equal (ceteris paribus), if the price of a commodity falls, the quantity demanded of it will rise, and if the price of a commodity rises, its quantity demanded will decline.



A consumer will purchase more pizzas, if the price of pizza falls and vice-versa.


This shows that there is an inverse relationship between price and quantity demanded.


Assumptions of the law

  • No change in the consumer’s income
  • No change in consumer’s tastes and preferences
  • No changes in the prices of other goods
  • No new substitutes for the goods have been discovered
  • People do not feel that the present fall in price is a prelude to a further decline in price
  • Consumers have perfect knowledge of the market
  • Consumers are rational human beings

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