ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which one is the assumption of law of demand?
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Price of the commodity should not change
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Quantity demanded should not change
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Prices of substitutes should not change
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Demand curve must be linear
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Explanation:
Detailed explanation-1: -The correct option is B Prices of substitute goods remain constant. The assumptions of the Law of Demand: Price of related goods remains constant.
Detailed explanation-2: -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.
Detailed explanation-3: -Prices of substitutes should not change is the assumption of law of demand.
Detailed explanation-4: -In other words, price elasticity of demand measures the customers’ price sensitivity. The conventional understanding of price elasticity is based on the following assumption: The more prices increase, the more customer demand for the product will decrease.
There is 1 question to complete.