Theory of Demand:
The word
'demand' is so common
and familiar with every one of us that it seems superfluous to
define it. The need for precise definition arises simply because
it is sometimes confused with other words such as desire, wish
want, etc.
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We have stated earlier that
demand for a commodity is related to price per unit of time. It
is the experience of every consumer that when the prices of the
commodities fall, they are tempted to purchase more.
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The individuals demand for a commodity is the amount of a
commodity which the consumer is willing to purchase at any given
price over a specified period of time.
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Changes in demand for a commodity can be shown through the
demand curve in two ways.
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While explaining the law of
demand, we have stated that, other things remaining the same
(cetris paribus), the demand for a commodity inversely with
price per unit of time.
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The demand curve generally slopes
downward from left to right. It has a negative slope because the
two important variables price and quantity work in opposite
direction.
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