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    Law of Demand

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    singadianarendra57
    The document discusses the Law of Demand, which states that as the price of a product rises, the quantity demanded decreases, and vice versa. It defines the law and explores factors that influence demand such as price, income, and tastes/preferences. The demand curve is downward sloping, representing the inverse relationship between price and quantity demanded. Exceptions to the law include Giffen and Veblen goods. Understanding the Law of Demand is important for effective pricing strategies, market forecasting, and consumer decision-making.

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    Law of Demand

    Uploaded by

    singadianarendra57
    3 views8 pages
    The document discusses the Law of Demand, which states that as the price of a product rises, the quantity demanded decreases, and vice versa. It defines the law and explores factors that influence demand such as price, income, and tastes/preferences. The demand curve is downward sloping, representing the inverse relationship between price and quantity demanded. Exceptions to the law include Giffen and Veblen goods. Understanding the Law of Demand is important for effective pricing strategies, market forecasting, and consumer decision-making.

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    Law-of-Demand (2)

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    The document discusses the Law of Demand, which states that as the price of a product rises, the quantity demanded decreases, and vice versa. It defines the law and explores factors that influence demand such as price, income, and tastes/preferences. The demand curve is downward sloping, representing the inverse relationship between price and quantity demanded. Exceptions to the law include Giffen and Veblen goods. Understanding the Law of Demand is important for effective pricing strategies, market forecasting, and consumer decision-making.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    3 views8 pages

    Law of Demand

    Uploaded by

    singadianarendra57
    The document discusses the Law of Demand, which states that as the price of a product rises, the quantity demanded decreases, and vice versa. It defines the law and explores factors that influence demand such as price, income, and tastes/preferences. The demand curve is downward sloping, representing the inverse relationship between price and quantity demanded. Exceptions to the law include Giffen and Veblen goods. Understanding the Law of Demand is important for effective pricing strategies, market forecasting, and consumer decision-making.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 8

    Law of Demand

    The Law of Demand states that as the price of a product or service rises, the
    quantity demanded decreases, and vice versa. Understanding this fundamental
    economic principle is crucial for businesses and consumers alike.
    Definition of Law of Demand
    1 Inverse Relationship 2 Consumer Behavior

    The Law of Demand establishes that there is an Consumers tend to buy more of a product or
    inverse relationship between the price of a service when its price is low, and less when its
    product or service and the quantity demanded price is high, all other factors remaining
    by consumers. constant.
    Factors Influencing Demand
    Price of the Product Income of Consumers Tastes and
    Preferences
    As price decreases, quantity
    demanded increases, and vice Higher incomes tend to increase Consumers' tastes and
    versa. the demand for most goods and preferences greatly affect their
    services. demand for a particular product
    or service.
    Price and Quantity Relationship

    Equilibrium Price Increase Quantity Decrease

    In a competitive market, the price When demand exceeds supply, A higher price will generally
    and quantity will eventually settle prices tend to rise, signaling the result in a decrease in the quantity
    at a point where demand equals need for either increased demanded by consumers.
    supply, creating market production or decreased
    equilibrium. consumption.
    Demand Curve
    1 Downward Sloping

    The demand curve is downward sloping, demonstrating the inverse relationship


    between price and quantity demanded.

    2 Price on Vertical Axis

    Price is represented on the vertical axis, and quantity demanded is shown on the
    horizontal axis.

    3 Shifts in the Curve

    Changes in factors other than price cause the entire demand curve to shift left or
    right.
    Exceptions to the Law of Demand
    Giffen Goods

    Giffen goods are rare cases where an increase in price leads to an increase in quantity
    demanded.

    Veblen Goods

    Veblen goods are luxury goods that experience higher demand as their price increases, as they
    are associated with status and exclusivity.
    Importance of Understanding the Law of
    Demand
    1 Effective Pricing 2 Market Forecasting 3 Consumer Decision-
    Strategy making
    Businesses can make
    Companies can effectively informed decisions and Consumers can make better
    set prices and anticipate plan for the future by purchasing decisions,
    changes in demand based analyzing market demand. maximizing their utility by
    on consumer behavior. considering the Law of
    Demand.
    Conclusion
    The Law of Demand is a fundamental concept in economics that shapes pricing, production, and consumption
    decisions. Understanding its implications is essential for businesses and individuals operating in a complex
    marketplace.

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