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This website relates to economics as it describes what the law of demand is and how it related to the real world in everyday life.we learnt a lot from this website but the most interesting thing we took from it would have to be how all different things have different thresholds for example bread is cheap everywhere you go and wouldnt have to go anywhere far to get it which would be a low threshold as where a fancy car that's only made in a certain place people would have to travel far and it would then have a high threshold.

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The range of a good is the distance (R) in both directions from a distribution point on a linear market that the good can generate demand (can be sold before the additional costs associated with distance are prohibitive).

Different goods have different thresholds. For example, low-cost items, such as bread or nuts and bolts, have low thresholds. In other words, people normally will not travel very far to obtain these things. Expensive items, however, usually have higher thresholds. Whereas a person would normally not be willing to travel two hundred miles to purchase a loaf of bread, he or she might be willing to travel that far to purchase a Rolls Royce (assuming he or she wants, and can afford to drive, a Rolls Royce). Although the car pictured below was priced at about $300,000.00, it is said that it corners rather well.

As is true of goods and services, centers also fall into an order that is determined by the highest-order good offered within the center under consideration. In other words, high-order centers, offer high-order goods and services. Generally, smaller places are lower-order centers and, therefore, do not offer high-order goods. Conversely, high-order centers generally offer almost all the lower-order goods and services of low-order centers, but also provide access to high-order goods and services, such as Bentley automobiles or highly advanced surgical facilities and services.

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The range of a good is the distance (R) in both directions from a distribution point on a linear market that the good can generate demand (can be sold before the additional costs associated with distance are prohibitive). Different goods have different thresholds. For example, low-cost items, such as bread or nuts and bolts, have low thresholds.

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This website relates to economics because it talks about under which circumstances the law of demand is valid and it tells us that it needs these to meet these restrictions to be a valid law of demand. Something we learnt from this website is that Robert Griffen was the founder of Griffen goods which in a way was the creation of the law of demand.

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The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price.

It is one of the important laws of economics which was firstly propounded by neo-classical economist, Alfred Marshall.

Other things remaining the same, the amount demanded increases with a fall in price and diminishes with a rise in price.
- Alfred Marshall

Thus, according to the law of demand, there is an inverse relationship between price and quantity demanded, other things remaining the same.

Law of demand expresses the functional relationship

D = f(P)

where,
P is price and
D is quantity demanded of a commodity

Other things being equal, if a price of a commodity falls, the quantity demanded of it will rise, and if the price of the commodity rises, its quantity demanded will decline.

Assumptions under which law of demand is valid

This law will be applicable only if the below mentioned points are fulfilled.

1. No change in price of related commodities.

2. No change in income of the consumer.

3. No change in taste and preferences, customs, habit and fashion of the consumer.

4. No change in size of population

5. No expectation regarding future change in price.

Understanding law of demand using demand schedule

This law can be explained with the help of demand schedule and demand curve as presented below:

Demand Schedule is a tabular representation of various combinations of price and quantity demanded by a consumer during a particular period of time. An imaginary demand schedule is given below:

The above demand schedule shows negative relationship between price and quantity demanded for a commodity.

Initially, when a price of a good is Rs.10 per kg, quantity demanded by the consumer is 10 kg.

As the price decrease from Rs.10 per kg to Rs.8 per kg and then to Rs.6 per kg, quantity demanded by the consumer increases from 10 kg to 20 kg and then to 30 kg respectively.

Further, fall in price from Rs.6 per kg to Rs.4 per kg and then to Rs.2 per kg, results in increase in quantity demanded by the consumer from 30 kg to 40 kg and then to 50 kg, respectively.

Thus, from the above schedule we can conclude that there is opposite inverse relationship in between price and quantity demanded for a commodity.

Understanding law of demand using demand curve

It is the graphical representation of demand schedule. In other words, it is a graphical representation of the quantities of a commodity which will be demanded by the consumer at various particular prices in a particular period of time, other things remaining the same.

We can show, the above demand schedule through the following demand curve:

In the figure above, price and quantity demanded are measured along the y-axis and x-axis respectively. By plotting various combinations of price and quantity demanded, we get a demand curve DDderived from points A, B, C, D and E.

This is a downward sloping demand curve showing inverse relationship between price and quantity demanded.

Limitations/Exceptions of law of demand

Inferior goods/ Giffen goods

Some special varieties of inferior goods are termed as giffen goods. Cheaper varieties of goods like low priced rice, low priced bread, etc. are some examples of Giffen goods.

This exception was pointed out by Robert Giffen who observed that when the price of bread increased, the low paid British workers purchased lesser quantity of bread, which is against the law of demand. Thus, in case of Giffen goods, there is indirect relationship between price and quantity demanded.

Goods having prestige value

This exception is associated with the name of the economist, T.Velben and his doctrine of conspicuous conception. Few goods like diamond can be purchased only by rich people. The prices of these goods are so high that they are beyond the capacity of common people. The higher the price of the diamond the higher the prestige value of it.

In this case, a consumer will buy less of the diamonds at a low price because with the fall in price, its prestige value goes down. On the other hand, when price of diamonds increase, the prestige value goes up and therefore, the quantity demanded of it will increase.

Price expectation

When the consumer expects that the price of the commodity is going to fall in the near future, they do not buy more even if the price is lower.

On the other hand, when they expect further rise in price of the commodity, they will buy more even if the price is higher. Both of these conditions are against the law of demand.

Fear of shortage

When people feel that a commodity is going to be scarce in the near future, they buy more of it even if there is a current rise in price.

For example: If the people feel that there will be shortage of L.P.G. gas in the near future, they will buy more of it, even if the price is high.

Change in income

The demand for goods and services is also affected by change in income of the consumers.

If the consumers' income increases, they will demand more goods or services even at a higher price. On the other hand, they will demand less quantity of goods or services even at lower price if there is decrease in their income. It is against the law of demand.

Change in fashion

The law of demand is not applicable when the goods are considered to be out of fashion.

If the commodity goes out of fashion, people do not buy more even if the price falls. For example: People do not purchase old fashioned shirts and pants nowadays even though they've become cheap. Similarly, people buy fashionable goods in spite of price rise.

Basic necessities of life

In case of basic necessities of life such as salt, rice, medicine, etc. the law of demand is not applicable as the demand for such necessary goods does not change with the rise or fall in price.

[ Related Reading: Law of Supply]

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Law of Demand: Assumptions, Exceptions and Limitations - Businesstopia

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The law of demand states that, other things remaining the same, the quantity demanded of a commodity is inversely related to its price. It is one of the important laws of economics which was firstly propounded by neo-classical economist, Alfred Marshall. Other things remaining the same, the amount demanded increases with a fall in price ...

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This website is relevant to our topic as it talks about the different reasons that the law of demand is in our society today. We’ve learnt many different examples from this website but the one that we found the most interesting is how the income effect can change how much people want to buy cause instead of saving the money they decided to buy more for the same price.

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Definition: The Law of Demand explains the downward slope of the demand curve, which posits that as the price falls the quantity demanded increases and as the price rise, the quantity demanded decreases, other things remaining unchanged.

There are several factors that explain why the demand curve slopes downward or why the law of demand showing an inverse relation between the price and quantity is valid?

Reasons for Law of Demand

1. Substitution Effect: The Substitution effect is seen when the quantity demanded for one commodity changes due to the change in the price of other closely related commodity. Such as, if the price of the commodity decreases while the price of the other is assumed to remain the same, then the latter becomes dearer and the demand for the cheaper commodity increases.
For example, suppose the price of tea decreases while the price of coffee remains unchanged, then the tea will be substituted for coffee and thus the demand for tea increases. This effect of increase in the demand for tea is called as the substitution effect.

2. Income Effect: The income effect explains the change in demand due to the change in the real income of the consumer as a result of the change in the price of the given commodity. Such as, with the fall in the price of a commodity, the real income (purchasing power) of the consumer increases since the consumer can now purchase more units of the commodity with the same amount of money income. Thus, the increase in demand due to the increase in the real income is called as the income effect.
For example, Suppose a boy purchases 5 ice-creams for Rs 50, and if the price of ice-cream falls to Rs 8, now he can purchase 6 ice-creams with the same amount of money income or may decide to buy the same quantity and save the rest of the money, as he is required to spend less.

3. Utility-Maximizing Behavior: The consumer theory posits that the consumer buys goods and services to maximize his total utility (satisfaction). We know, that the marginal utility decreases with each additional unit of the commodity and thus, this is one of the reasons for the downward slope of the demand curve, which shows that the demand for the normal goods increases with the fall in the prices.
A person exchanges his money income for the purchase of the commodity so as to maximize his satisfaction. He continues to buy the commodity as long as the marginal utility of money (MU m) is less than the marginal utility of the commodity (MU x).

4. Large Number of Consumers: The effect on demand due to the change in the number of consumers as a result of a change in the price also causes the demand curve to slope downwards. Such as, if the price of the commodity falls, then many new consumers who were earlier not able to afford the commodity due to its high price, starts purchasing it. And as a result, the demand for the commodity increases.On the other hand, if the price rises, then few rich people can buy it, and many consumers will withdraw themselves from the market. And as a result, the demand for the commodity decreases.

5. Varied Uses of the Product: This is one of the important reasons for the law of demand, which explains that the product has several uses and can be utilized for different purposes. When the price of the commodity rises, then the consumer restricts its usage for the most important purpose. On the other hand, if the commodity becomes cheap then it can be utilized for all kinds of purposes, whether important or not.
For example, if the price of coal increases, then it will be more used in the industries where it is an essential raw material, whereas its demand for less important use such as in household (bonfire) gets reduced.

Thus, these are the important factors that explain the slope of the demand curve and advocates that the law of demand is valid.

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What are the reasons for Law of Demand? - Business Jargons

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Definition: The Law of Demand explains the downward slope of the demand curve, which posits that as the price falls the quantity demanded increases and as the price rise, the quantity demanded decreases, other things remaining unchanged.

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On this wall you can watch videos, look at websites or event look at pictures to learn and find out what is The law of demand and how is it impacting our daily lives.

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In this video I learn that based on the product, the demand can change. If it is a non-essential item then the consumer will look more closely at the price and can change their view of how much they demand that product. However, if it is a essential item then the demand  for the product will always be there. Meaning that people are less likely to look at the price as people view the item and They need it to live.

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In this video we learn that if a product price goes up. Then the demand would go down as more people will be less likely to buy as they do not have that can of money to buy the product. Also, when it comes to price, if you have more house than people who want to buy then the price would go down and therefore the demand would go down. If there are more people that want to buy a house then there are house, the demand would be more and therefore the price of the house would go up.

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Law of demand | Supply, demand, and market equilibrium,Theory of Demand and Supply,

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In this video it goes over what law of demand mean and how it is using in real life. In this video you learn that when the price is lower the demand is higher. When the price is higher then the demand is lower. Things that can affect demand are income to the economy, price changes in competitive goods, and swings in preferences for the consumer.

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In this picture the kid is putting a price on lemonade. However he also put s sign out, saying that it is a limited time only. Making the demand for the lemonade to increase. Which means people are willing to buy it as they think that they are getting it at a discount.

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The Pricing Elasticity comics and cartoons

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Click to see top-quality comics and cartoons about pricing elasticity at The Cartoonist Group.

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In this picture the gas company is raising the price of oil and the person still is buying it. Therefore factors in that people will pay for stuff they need. they will pay for stuff that is in higher in price because in is in high demand.

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The Pricing Elasticity comics and cartoons

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Click to see top-quality comics and cartoons about pricing elasticity at The Cartoonist Group.

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In this picture the pest control company is releasing pests into the neighborhood and therefore driving up their demand up. As people will need to hire a pest control company to have the pests removed.

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Creating Supply And Demand Cartoons and Comics - funny pictures from CartoonStock

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Creating Supply And Demand funny cartoons from CartoonStock directory - the world's largest on-line collection of cartoons and comics.