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Assumptions of Law of Demand Law of Demand can operate and remain valid only if certain things like income, population size, climate, consumer's tastes and expectations, etc., are assumed to remain constant or equal. In other words, there is a need for an assumption or a consideration that these things do not change at all under any circumstances.The six basic assumptions of law of demand are as

Determinants of Demand The following image depicts determinants of demand with their relations.The factors affecting demand are:Price, Income, Tastes, Price of Related Goods, Consumers' Expectations, Number of Buyers, Climatic Condition, Level of Economic Activity, and Miscellaneous Factors. Now let's discuss in detail each factor that influence demand. 1. Price Price is the value of product or

Extension and Contraction of Demand Assuming other factors (or determinants) remain constant (don't change), the change seen in the demand due to a change in the price is called Extension and Contraction of Demand.The concept of extension and contraction of demand in economics can be studied and best understood with the help of the following graph.Image credits © Gaurav Akrani.In the above