The Law of Demand expresses
(A) effect of change in price of a commodity on its demand
(B) effect of change in demand of a commodity on its price
(C) effect of change in demand of a commodity over the supply of its substitute
(D) None of the above
Correct Answer : effect of change in price of a commodity on its demand
Question Asked : SSC Tax Assistant (Income Tax & Central Excise) Exam 2008
Explanation : The law of demand states the inverse relation that comes to exist of between price in one hand and quantity demanded on the other. The law of demand portrays that demand is the function of price. Price is the key determinant of demand. Fluctuations in price leads to changes in the quantity demanded. In other words, the higher the price of a product, the lower the quantity demanded.
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