Answer to Question #247777 in Economics of Enterprise for Sadam Dine

Question

According to the law’s Demand, the higher the price of commodity, the lower will be quantity demand. Explain why.

Answer 1

The law of demand states that the higher the price, the lower the quantity demanded. It is based on law of diminishing marginal utility, the law states that consumers use the first units of an economic good to satisfy the most urgent needs and then use additional unit of the good for lower valued needs.