law of demand (ଚାହିଦା ସୂତ୍ର ) +2 2nd year arts || chahida sutra class 12th odiasha

law of demand (ଚାହିଦା ସୂତ୍ର ) +2 2nd year arts || chahida sutra class 12th odiasha

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PART OF

Practical Look At Microeconomics

ECONOMICS  MICROECONOMICS

Law of Demand

By INVESTOPEDIA STAFF

 Reviewed By BRIAN BARNIER 

 Updated Mar 27, 2020

What is the Law of Demand?

The law of demand is one of the most fundamental concepts in economics. It works with the law of supply to explain how market economies allocate resources and determine the prices of goods and services that we observe in everyday transactions. The law of demand states that quantity purchased varies inversely with price. In other words, the higher the price, the lower the quantity demanded. This occurs because of diminishing marginal utility. That is, consumers use the first units of an economic good they purchase to serve their most urgent needs first, and use each additional unit of the good to serve successively lower valued ends.

KEY TAKEAWAYS

The law of demand is a fundamental principle of economics which states that at a higher price consumers will demand a lower quantity of a good.

Demand is derived from the law of diminishing marginal utility, the fact that consumers use economic goods to satisfy their most urgent needs first.

Copyright Disclaimer under Section 107 of the copyright act 1976, allowance is made for fair use for purposes such as criticism, comment, news reporting, scholarship, and research. Fair use is a use permitted by copyright statute that might otherwise be infringing

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