Question

a. Please Thoroughly and completely explain the Law of Demand
A schedule or curve that shows the various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time.
Law of demand states that quantity of a good demanded falls as the price rises and vice versa, other things remaining constant.
ii.1.Diminishing Marginal Utility, 2.Income Effect, 3.Substitution Effect

Answer 1

The law of demand states that other thing remains same there exists the inverse relationship between Demand and Price. Higher the price lower will be the quantity demanded, likewise, lower the price higher will be the quantity demanded.It must be noted that there is both price and non-price factors determine the demand.

Price	Demand
50	20
40	40
30	60
20	80
10	100

The tables showing the relationship between demand and price when the price is 50 the total quantity demanded 20. When the price is low 10 the quantity demanded 100 units.

The following the reasons why demand increases and price falls.

Diminishing marginal utility-The consumption of additional units of goods gives less ratification and hence consumer pays less for the additional units goods.

Income effect: falling the price of the goods results increase in the real income of the persons or purchasing power and hence the better can be demanded.

Substitution effect-some goods are the substitute for each other fall in the income the cheaper goods can be substituted for dearer goods.

Thus these are the factors responsible the law of demand theory.