Yes, I agree with this statement.
Assumptions to the Law of Demand:
- Prices of Substitute goods remain constant : The price of substitute goods should remain unchanged, as change in the price will affect the demand for the commodity.
- Prices of Complementary goods remains constant : A change in the price of one good will affect the demand for other, thus the prices of complementary goods should remain unchanged.
- No Expectation about future changes in prices : The consumers do not expect any significance rise or fall in the future prices.
- No change in size of Population : The size of population, gender ratio and age composition are assumed to remain constant. As such changes are sure to affect demand.
- No change in Taxation Policy : The level of direct and indirect tax imposed by the government on the income and goods should remain constant.
- Constant Level of Income : Consumer’s income must remain unchanged because if income increases, consumer may buy more even at a higher price not following the law of demand.
- No Change in Tastes, Habits, Preference, Fashions, etc. : If the taste changes then the consumers preference will also change which will affect the demand. When commodities are out of fashion, then demand will be low even at a lower price.
