Law of demand is defined as: When the price increases the demand of product decrease when the price decrease then the price of product increases, other thing remaining the same. The demand to say when two conditions are applying that is the willingness to purchase and ability to purchase. Demand in inversely proportional to price.

 

The assumptions of demand are following: Constant of price. It is assumed that the price of good remains the same. The price of substitution: The price of substituted product should remain same.

 

Income: The income should remain same. It is important that there should be no change in income of a person. Population: The population of a given area should be also remaining same. Fashion: There should be no change in fashion.

 

Price in Future: It is also assumed that the price of good in future should also be same. There is no prediction of increase and decreases in the price of goods in future.

 

Limitations: The limitation is that where law does not apply. Hobbies: It does not apply on hobbies. Cheap Goods: It also do not apply on cheap goods. Ignorance: If there is ignorance the law does not apply