Question

State and explain the law of demand with the help of a hypothetical schedule and graph.

State and explain the law of demand with the help of a demand schedule and a demand curve.

Answer 1

The law of demand states that, other things remaining equal, the quantity demanded of a commodity increases when its price falls and decreases when its price rises. Thus, law of demand shows an inverse relationship between the price and the quantity demanded of a commodity. Let's understand the law of demand with the help of a hypothetical schedule and graph:

Demand Schedule for Apples

Price (per kg) ₹	Quantity demanded (kg per month)
100	3
90	6
80	9
70	12

The economic demand schedule for apples is shown in the above table. Looking at the demand schedule above, we can observe that when apples were priced at ₹ 100 per kg, the economy as a whole demanded 3 kg of apples every month. Demand rises from 3 kg to 6 kg per month when prices drop to ₹ 90 per kg. Demand for the product rises to 9 kg per month when prices are further reduced to ₹ 80 per kg. As a result, the schedule shows that quantity demanded rises in response to a drop in apple price, illustrating the inverse relationship between the two variables.

The graphical representation of the schedule is called the demand curve.

The demand curve for apples in an economy is depicted in the graph above. Looking at the curve, we can observe that when the price was ₹ 100 per kg, 3 kg of apples was requested. The quantity requested rises to 6 kg when the price drops to ₹ 90 per kg and to 9 kg when the price drops to ₹ 80 per kg. This demonstrates that the quantity requested of apples rises while the price decreases, illustrating the inverse relationship between the two. Therefore, with the use of the demand schedule mentioned above and the graph, we can conclude that while other factors stay the same, the law of demand is valid because the quantity desired of a good rises with price increases and falls with price increases.