Law of demand with its criticisms.
Law of Demand... It is one of the most well-known and most applied theory in microeconomics. It is the basis of consumption, production, exchange and distribution of goods and services. It was first introduced and developed by Alfred Marshall in his book “Principles of Economics” published in 1890 AD. It is based on functional relationship between price and quantity demanded for a particular commodity i.e Qdx=F(Px). According to this law, when price of a commodity decreases, quantity demanded for the commodity increases and vice versa, if other factors remaining the same. It means there is inverse relationship between price and quantity demanded for a particular commodity. According to Alfred Marshall, “The amount demanded increases with a fall in price and decreases with a rise in price, other things being equal . “ Assumptions of Law of Demand : The law of demand is based on several assumptions which may or may not be true in real life. Some of them are as ...