Law of demand means that the increase in the price of the product decreases its demand in the market. People will purchase the product more when they see that the price is getting down. This schedule of demand helps in knowing what quantity a customer is going to purchase and at what price. Generally, the demanded number of a commodity is contrary to its price.
Conjecture below which law of demand is well grounded
The law of demand will appropriate solely when the facts mentioned below are satisfied.
● If there is no alteration in the income of an individual user.
● The size of the population remains the same.
● The price of interconnected commodities does not change.
● No compromise in the customs, fashion, preference and taste of the customer.
● There should be no assumptions concerning the future alteration in the price.
You can simply understand the law of demand by two methods one is by the demand curve and other with the help of the demand schedule here we will be discussing how to understand law of demand with the help of the demand scheduler.
Demand Schedule is basically a way to represent the price and the quantity demanded in a form of table. You can represent the quantity of the product and the different combination of the price that is demanded by the customer within the specific period of time. As the price of the product decreases the consumption increases. Therefore, we can say that there is always a negative relationship between the price and quantity demanded for a commodity.
Shortcoming/Inconsistency of law of demand
There are various irregularities and the fallibility of the law of demand discussed below:
The law of demand is not valid to the basic necessities of life like sugar, milk, salt etc. these are the things that we use daily and these kinds of goods does not alter with the fall or the rise in price.
Inferior goods or Giffen goods
Predominantly the Giffen goods are the goods that are cheaper in price and as the price of these product increases consumption decreases which is almost against the law of demand. This shows that there is an indirect relationship in the price and quantity that is demanded.
Prestige valued goods
Some goods are so expensive that a common man cannot afford it and one example of such goods is diamonds. It is a product that only rich people can afford. The higher the price, higher is the prestige value. In such cases people prefer to buy less amount of diamond because when the price falls its prestige value also becomes less and when the price increases the prestige value increases and it results in demand in the quantity.
Change in the fashion
If the product is out of fashion, then law of demand will not be valid for this as this is very obvious that when a product is out of fashion you do not want to buy it even at the low prices.
The assumption of price is against the law of demand, when people assume that the price of the product is going to fall in the coming days then they do not buy the product and wait for the price to fall so that they can afford large quantity in lesser amount. On the contrary if they assume the price to be higher in the future they buy the commodity in the price they are getting now.