The law of demand describes that, other things being equal, the demand for a good extends with a decrease in price and contracts with an increase in price. There is an inverse relationship between quantity demanded of a commodity and its price, provided other factors influencing demand remain unchanged.
Law of demand can be explained with the help of demand schedules and demand curve:
Demand Schedule
| Price (in Rs.) Px |
Quantity Demanded (Units) Qx |
| 6 |
100 |
| 5 |
200 |
| 4 |
300 |
The schedule shows extension of demand in response to decrease in price of the commodity. Thus, demand stretches from 100 to 200 units when price declines from Rs. 6 to Rs. 5 per unit, and from 200 to 300 units when price further declines from Rs. 5 to Rs. 4. This can be clarified with the help of adjoining demand curve.
