The Law of Demand
THE LAW OF DEMAND The law of demand states that the demand for a commodity increases when its price decreases and it falls when its price rises, other things remaining constant. This is an empirical law, i.e., this law is based on observed facts and can be verified with new empirical data. As the law reveals, there is an inverse relationship between the price and quantity demanded. The law holds under the condition that “other things remain constant”. “Other things” include other determinants of demand, viz., consumers’ income, price of the substitutes and complements, taste and preferences of the consumer, etc. These factors remain constant only in the short run. In the long run they tend to change. The law of demand, therefore, hold only in the short run. The law of demand can be presented through a demand schedule. Demand Schedule is a series of prices placed in descending (or ascending) order and the cor