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Online CBSE Class 12 Economics Notes – Law of Demand

CBSE Class 12 Economics Notes - Demand

Online CBSE Class 12 Economics Notes – Demand – Part ii

In this article, we have shared the Economic Class 12 notes in detail for Demand Schedule, Demand Curve, Law of Demand and movement and the shift in the Demand curve.

Law of Demand

The law of demand refers to the relationship between a quantity of the product demanded and price of a product. It shows an inverse relationship between Demand and price while other determinants remaining same. According to the Alfred Marshal- amount demanded increases with the fall in price and decrease with the rise in price.

“At any given time, the demand for a commodity or service at the prevailing price is greater than it would be at a higher price and less than it would be at a lower price” Prof Thomas

Assumptions of Law- all the other determinants are constant. There is no change in Income, custom, quality, substitute goods, complementary goods, taste and preference, fiscal measures etc.

Demand Schedule

It is the tabular representation of the relationship between the demand for a product and a price. There are two types of Demand Schedule

Individual Demand Schedule– Quantity demanded by an individual consumer at specified price and time..

 

Market demand schedule-Quantity demanded by aggregate consumers at specified price and time

For recorded lectures by experts on the Law of Demand, click here online classes for Class 12 Economics .

 

Demand Curve

The demand curve is the representation of price and demand. It shows the inverse relationship between price and the quantity demanded. It is the graphical representation of demand schedule.

CBSE Class 12 Economics Notes - Demand Curve width=

  • The x-axis indicates Price and Y-axis indicate quantity demanded.
  • The demand slopes negatively downward.
  • The individual purchase more commodity at the lower price in the given time period(other factors remaining same)

 

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Exceptions to the law of demand

  • Giffen Paradox (inferior and superior goods) – According to Sir Robert Giffen, demand decreases with increase in consumer income in case of Inferior goods and superior goods

 

  • Necessity Goods – Law of demand not applicable as demand is not much affected by fall or rise in price. For eg Salt

 

  • Prestige or luxurious goods – Demand remains same with increase and decrease in price as these goods are the status symbol. For e.g Diamond

 

  • Speculation – When the consumer makes the assumption of changes in price in future. If they expect the rise in the price of product X in future, the demand for the product will increase at present.

 

  • Brand loyalty – Preference of a consumer for a specific brand. Demand remains same with increase and decrease in price.

 

  • Emergency Situations – In the emergency situation like an earthquake, war etc. Demand for a product like Flour will increase regardless of price.

 

The shift in Demand Curve

 

When the price remains constant and change in quantity demanded takes place due to other factors which cause the shift in the demand curve. The shift in demand curve can be due to change in Income, taste, preference, the price of related goods and other factors.

 

The rightward shift in demand curve implies an increase in demand for a commodity at the same price due to change in other factors other than price.

 

The leftward shift in demand curve implies fall in demand at the same price due to change in other factors other than price.

CBSE Class 12 Economics Notes - Demand curve

  • The x-axis indicates Price and Y-axis indicate quantity demanded.
  • Price remains unchanged
  • D-D1 – rightward shift-increase in quantity demanded
  • D-D2- leftward shift- decrease in quantity demanded.

 

 

Movement on Demand Curve

 

When product quantity demanded changes due to the change in price and other things remain unchanged. The movement takes place in two ways-

Upward movement– It implies contraction of demand due to the increase in price.

Downward movement– It implies an expansion in demand due to the fall in price.

CBSE Class 12 Economics Notes - Demand curve

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1 comment

  1. Awesome place!!! Thank you soooooo much 😄😊😊😊😊
    Heaven for students,complete and proper notes👌.

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