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Which one is the assumption of law of demand
- APrice of the commodity should not change
- BQuantity demanded should not change
- CPrices of substitutes should not change
- DDemand curve must be linear
Correct answer: C
Discussion 1
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CCommunity
Prices of substitutes should not change
Prices of substitutes should not change is the assumption of law of demand. For example if the price of Coke is decreased then it will lead to fall in the demand for Pepsi even when the price of Pepsi has remain constant as Pepsi is close substitute of Coke, in the same way if the price of Coke is increased than it will lead to rise in demand for Pepsi.
Prices of substitutes should not change is the assumption of law of demand. For example if the price of Coke is decreased then it will lead to fall in the demand for Pepsi even when the price of Pepsi has remain constant as Pepsi is close substitute of Coke, in the same way if the price of Coke is increased than it will lead to rise in demand for Pepsi.