Law of Demand.pptx........................................

Law of Demand.pptx

1. Law of Demand By Tinto Tom

2. Determinants of Demand Price of the product Price of related goods Income of the consumer Tastes and preferences of consumer ADD A FOOTER 2

3. The law of demand speaks about the relationship between price and demand. “Law of demand states that, other things being constant, quantity demanded of a product varies inversely with it’s price”. When price rises, quantity demanded falls and when price falls, quantity demanded rises 3

4. Demand Schedule The law of demand expressed in a tabular form is called a demand schedule. In the table we can see that as price falls from Rs.16 to Rs.8 quantity demanded expands from 5 to 9 units. If we dram a graph based on the demand schedule we get demand curve. 4 Price( Rs ) Quantity Demanded (units) 16 5 14 6 12 7 10 8 8 9

5. 30% Category Title 25% Category Title Category Title 10% Category Title 20% Category Title 5% Category Title 5 Demand Curve Demand curve means it is a graphical representation of the demand schedule. It shows negative relationship between the quantity demanded and price of the product. Demand curve has a negative slope. It slopes downward from left to right. It again indicates that, a fall in price leads to a rise in demand and rise in price leads to fall in demand.

6. Exceptions to Law of Demand 6 Goods with Snob Appeal Items like jewellery and fancy cars are valued for their Snob appeal. People are buying these items because they are highly priced. If prices of these goods reduced buyer’s satisfaction goes down. U ncertain Product Q uality In the case of many goods , people may not know the quality. Normally people judges the quality based on price. The commodities, whose price act as the signals of quality will be demanded more at high prices. So, demand curve has a positive slopes. Giffen Goods People consider certain goods are inferior goods As price of these goods falls, people purchase less of them. So, giffen goods have a positive supply curve.

7. Big Image Slide 7