The Law of Demand definition and the Limitation of the Law
The Law of Demand
This law simply expresses the relationship between quantity demanded of a commodity and in prices. The law states that demand varies inversely with price, not necessarily proportionately. If the price falls, demand will extend and vice versa. The law of demand indicates the inverse relationship between price and quantity demanded.
Viz. Demand is a function of price, i.e., D = F (P)
Limitation of the Law
1. Change in Taste or Fashion: Your taste has been changed. Or if the commodity has gone out of fashion.
2. Change in Income: If the consumers’ income has gone up, he may be willing to buy more in spite of rise in price.
3. Change in Other Prices: Say tea and coffee
4. Discovery of Substitutes: Jute made in Bangladesh and discovered paper bags.
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