Question

What is Law of Demand? What is Law of Supply? Analyze how the Law of Demand applies to a Recent Purchase that you made. Describe how the product has changed in price and explain whether the price change is due to supply or demand. Did the change in price affect your decision to purchase the item?

Answer 1

Law of Demand: law of demand states that ceteris paribus (other things remaining same) if price of good increases then quantity demanded decreases and vice versa. Other factors are factors affecting demand apart from price of commodity( income of consumers, price of related goods, future expectations etc)

Law of supply states that other factors remaining same quantity supplied of a commodity increases with increase in prices and vice versa. other factors are( technology changes, cost of production,natural conditions etc)

Purchase of a newly launched Samsung mobile

I was keen in buying a new cell phone as my old one really needed replacement. Instead of spending on repairs and seeing to its outdated technology i planned to buy a newly launched samsung mobile. But since it was newly launched with latest technology its price was heavy on my pocket. so i postponed my decision and gradually moved on with my older one after getting it repaired. after a span of six months i randomly checked the cost of same model and found it very much lower then what it cost earlier. I immediately made up my mind and purcahsed it from a store and got additional benefits as well. My decision was based on price reduction. This means my demand was dependent on its price hence of law of demand operates

The drastic change in price level of the mobile was due to low demand in market due to its heavy price. so in order to raise demand for this new model there was only single possible way by reducing price. There was no benefit to company in piling up the stock of models as with passage of time battery also gets damaged.

Yes, the price change affected my decision to purchase the mobile which i avoided when it was expensive. It is due to operation of law of demand. company seeing a poor market for its product because of price issue has planned to bring up demand by reducing the prices. Also many more willing customers apart from me must have made up there mind to purchase it when its price was reduced.