1. Subject:- Managerial Economics and Business
Environment
Subject Teacher:- Nirav Mandavia
Presented by – Pallavi Priya
Date:24/9/16
2. Meaning of Demand:
Whenever desire for anything is backed by
ability and willingness to pay for that thing,
it flows out in the form of an effective
demand.
Desire to purchase
Ability to pay
Willingness to spent
Demand = desire + ability to pay + willingness
to pay
3. In simple words, the law of demand states
that, other things remaining constant, as the
price of a particular commodity increases,
the quantity demanded for it decreases and
vice-versa.
“Other things being equal, the demand is
higher with the fall in price and diminishes
with the rise in price.”
-Alfred Marshall
4.
5. No Change In Consumer Income
No Change In Consumer Preference
No Change In Fashion
No Change In Price of Related Goods
No Expectation of Future Price Change
6. According to the law of demand, there
exists an inverse relationship between price
of a commodity and its quantity demanded.
However, there are certain exceptions to this
rule which are enumerated as:
7. 1. Giffen Goods : potatoes and other staple
foods
2. Prestigious Goods: diamond
3. Fear of Shortage: onion and gold
4. Expectations of Change in the price of the
commodity
8. Thus, it can be concluded that the law of
demand does not apply in every case and
situation and there are certain circumstances
where the law of demand becomes
ineffective.
