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Explain the Inverse Relationship Between Price and Quantity Demanded of a Commodity. - Economics

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Explain the inverse relationship between price and quantity demanded of a commodity. 

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Solution

The inverse relationship between price and quantity demanded of the commodity is explained by the Law of Demand. This law states that other things remaining constant, the demand of a good move opposite to the movement in the price of the good. This law can be explained with the help of the following demand schedule. 

                Price of X

                    (Rs)

   Quantity Demanded of X

             (Units)

7

50

8

45

9

42

10

38

11

35 

In the schedule, we can analyse that as price of the commodity X increases from Rs 7 to Rs 8, the quantity demanded of X falls from 50 units to 45 units. This confirms the negative relationship between the quantity demanded and the price of the commodity. 

Concept: Determinants of Demand
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