Question

Why are the Law of Demand is Important in our day to day lives.

Answer 1

The law of demand is one of the most fundamental concepts in economics. It works with the law of supply to explain how market economies allocate resources and determine the prices of goods and services that we observe in everyday transactions. ... In other words, the higher the price, the lower the quantity demanded.

Answer 2

Answer:

The law of demand is one of the most fundamental concepts in economics. It works with the law of supply to explain how market economies allocate resources and determine the prices of goods and services that we observe in everyday transactions. In other words, the higher the price, the lower the quantity demanded. For example, if the price of a gallon of milk rose from $5 to a price of $15, this is a big price increase. This significant price increase causes the consumer to demand less of that product at the price of $15 because not only is it more expensive, but the new price is very unreasonable for a gallon of milk. If demand increases and supply remains unchanged, then it leads to higher equilibrium price and higher quantity. If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and lower quantity.

Explanation:

The study of law of demand is helpful for a trader to fix the price of a commodity. He knows how much demand will fall by increase in price to a particular level and how much it will rise by decrease in price of the commodity. The law of demand states that other factors being constant (cetris peribus), price and quantity demand of any good and service are inversely related to each other. When the price of a product increases, the demand for the same product will fall. an example of this is If movie ticket prices declined to $3 each, for example, demand for movies would likely rise. As long as the utility from going to the movies exceeds the $3 price, demand will rise. As soon as consumers are satisfied that they've seen enough movies, for the time being, demand for tickets will fall. The law of supply and demand is a theory that explains the interaction between the sellers of a resource and the buyers for that resource. Generally, as price increases people are willing to supply more and demand less and vice versa when the price falls.