Law of Demand

INTRODUCTION
What is economics?

The term economics comes from the Ancient Greek οἰκονομία (oikonomia, "management of a household, administration") from οἶκος (oikos, "house") + νόμος (nomos, "custom" or "law"), hence "rules of the house(hold)".

In the modern world ‘economics’ cannot be defined as covers several diverse aspects.
One common theme is “Economics is the study of how society uses scarce resources having alternative uses to produce valuable commodities and distribute among different people”.

LAW OF DEMAND

“Demand for any commodity refers to that commodity that will be purchased at a particular price during a particular period of time”


“The law of demand states that, other things remaining equal, the quantity demanded of a commodity increases when its price falls and decreases when its price rises”



                                                          The graphical representation of a demand schedule is
                                                          called as a demand curve. The X axis measures the
                                                          quantity demanded and Y axis shows the price. D D
                                                            is a demand curve which is a negative slope,
                                                            representing   an inverse functional   relationship
                                                            between demand and price.



The law of demand involves certain assumptions like :
* Taste and preference of consumer remaining constant
* Consumer’s income is fixed and constant.
* The size of population remains unchanged.
* No change in level of taxation and other fiscal measures.

ELASTICITY

In Economics , elasticity is the ratio of the percent change in one variable to the percent change in another variable. It is a tool for measuring the responsiveness of a function to changes in parameters in a relative way....