BUSINESS ADMINISTRATION
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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1.Price of the commodity should not change
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2.Quantity should not change
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3.Supply should not change
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4.Income of consumer should not change
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Detailed explanation-1: -The law of demand is based on the following assumption or conditions: No change in consumer’s income: Consumer’s income must remain unchanged because if income increases consumer may buy more even at a higher price invalidating the law of demand.
Detailed explanation-2: -Assumptions to the law of Demand There will be no introduction of any substitutes. There will be no change in prices of substitute goods. There will be no anticipation of price change in future. There will be no change in the income level of the consumer. There will be no change in the taxation policy of the government.
Detailed explanation-3: -Solution(By Examveda Team) Prices of substitutes should not change is the assumption of law of demand.
Detailed explanation-4: -Substitution of goods is not an assumption under law of DMU, because if one good substitutes for another then law of DMU will not remain applicable.