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Question
Following is not the assumption of law of demand:
Options
Commodity's own price should remain constant.
Income of the consumers should remain constant.
Price of related good should not change.
There should be no change in consumer's tastes an preference.
Solution
Commodity's own price should remain constant.
Explanation:
The law of demand states that, all else being equal, as the price of a commodity decreases, the quantity demanded increases, and vice versa. For the law of demand to hold, certain factors must remain constant, such as the income of consumers, the price of related goods, and consumer tastes and preferences.
However, the assumption that "commodity's own price should remain constant" is incorrect because the law of demand examines how quantity demanded changes in response to changes in the commodity's own price.
RELATED QUESTIONS
What are the assumptions of the Law of Demand?
State with reason whether you agree or disagree with the following statement.
Price is the only determinant of demand.
Which is an assumption to law of demand?
| Price (in ₹) | QA (units) | QB (units) | QM (market demand)(units) |
| 10 | 4 | 5 | ______ |
| 20 | 3 | 4 | ______ |
| 30 | 2 | 3 | ______ |
| 40 | 1 | 2 | ______ |
Complete the above schedule and answer the following:
- Identify and state the underlying law.
- State four assumptions of the law.
- Draw three relevant curves based on the above schedule in one diagram.
Which of these is NOT an assumption of the Law of Demand?
