Use BookMyEssay:Law of Demand Assignment Help

The demand for a product is connected to its price. Every consumer experiences that when the costs of the products fall, they end up buying more. When the costs of commodities increase, then the quantity demanded diminishes.

This law states that the quantity bought varies with price inversely. To put it in other words, it can be said that when the price tends to be higher, then the quantity demanded becomes lower.

This happens due to the diminishing marginal utility. At times, consumers utilize the initial units of economic goods they buy for serving their urgent requirements first. They also utilize every extra unit of the products for serving lower-valued ends successively.

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The Significance that Law of Demand Has

Significant to finance minister – The finance minister gets hugely benefitted from the law of demand. When by escalating the tax the cost increases then the demand gets reduced considerably. Again, it becomes useless to escalate the tax as revenue will remain nearly the same. The tax would be levied at a high rate only on those products whose demand wouldn’t fall with the escalation in price substantially.

Determination of cost – The study of this law is useful to the traders for fixing the cost of a product. They know demand would fall when an escalation in cost is made to a specific level. Additionally, a trader is also aware of the level at which it would rise by lessening the cost of the product. This schedule can propose information regarding the entire market demand at various costs. This aids the management in deciding whether or not the upsurge or shrinkage in the cost of a product turns desirable.

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The 5 Factors of Demand

The chief five factors of demand are as follows:

• The cost of goods and services.
• The buyers’ income.
• The costs of related commodities and services and include both complementary and that is bought with a specific item. This also includes substitutes or those products that are bought in place of another product.
• The preferences and tastes of consumers that drive demand.
• The expectations of the consumers. Most often, this is referred to whether consumers believe the costs of the product would escalate or diminish in the forthcoming days.

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