ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The law of demand states that quantity demanded increases when price decreases, but why? Two reasons why the demand curve slopes downward are the substitution effect and the income effect. The income effect states that when the price of a good decreases, it is as if the buyer of the good’s income went up.

Detailed explanation-2: -If the price decreases, quantity demanded increases. This is the Law of Demand. On a graph, an inverse relationship is represented by a downward sloping line from left to right.

Detailed explanation-3: -The Law of Demand In other words, the higher the price, the lower the level of demand. Because buyers have finite resources, their spending on a given product or commodity is limited as well, so higher prices reduce the quantity demanded. Conversely, demand rises as the product becomes more affordable.

Detailed explanation-4: -1. The decrease in demand causes excess supply to develop at the initial price. a. Excess supply will cause price to fall, and as price falls producers are willing to supply less of the good, thereby decreasing output.

Detailed explanation-5: -The law of demand states that a higher price leads to a lower quantity demanded and that a lower price leads to a higher quantity demanded.