Assumptions On Law of Demand Assignment Help
Assumptions on which the law of demand is based
The law of demand is based on the basic assumption that ‘other things remain equal’ or unchanged. This means that
- Prices of related goods (substitutes and complementary goods ) remain same or unchanged,
- Consumers’ income or budget remains unaltered,
- There is no change in tastes, preferences or choices of the consumers,
- The good in question is a normal good and not an inferior good,
- All units of the good under consideration are homogeneous, inentical or exactly alike, and
- All external environmental factors remain same in the sense that weather, climatic conditions, threat of war, political and other external conditions remain the same.
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