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This is an assumption of law of demand

A. Price of the commodity should not change

B. Quantity should not change

C. Supply should not change

D. Income of consumer should not change

Answer: Option D

Solution(By Examveda Team)

The law of demand is based on the following assumption or conditions:
No change in consumer's income: Consumer's income must remain unchanged because if income increases consumer may buy more even at a higher price invalidating the law of demand.
No change in the size and composition 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 consumer's taste, preference, habits and fashions: If the taste changes then the consumer's preference also will change which will affect demand. When commodities go out of fashion then demand will be low even at a low price.
No expectation of future price change: The consumers do not expect any significant rise or fall in the future prices.
No change in prices of related goods: The law assumes that prices of substitutes and complementary goods remain constant.
No change in tax policy of the Government: The level of direct and indirect tax imposed by the government on the income and goods should remain constant.

This Question Belongs to Commerce >> Economics

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Comments ( 1 )

  1. Umar Kashmiri
    Umar Kashmiri :
    4 years ago

    Sir I think there is some error in this question or in the options... Plz can you take a look at this question once again.

Related Questions on Economics

Which among the following statement is INCORRECT?

A. On a linear demand curve, all the five forms of elasticity can be depicted

B. If two demand curves are linear and intersecting each other, then, coefficient of elasticity would be same on different demand curves at the point of intersection.

C. If two demand curves are linear and parallel to each other, then, at a particular price, the coefficient of elasticity would be different on different demand curves.

D. The price elasticity of demand is expressed in terms of relaive not absolute changes in Price and Quantity demanded.