Question

Following is not the assumption of law of demand:

Options

• Commodity's own price should remain constant.

• Income of the consumers should remain constant.

• Price of related good should not change.

• There should be no change in consumer's tastes an preference.

Answer 1

Commodity's own price should remain constant.

Explanation:

The law of demand states that, all else being equal, as the price of a commodity decreases, the quantity demanded increases, and vice versa. For the law of demand to hold, certain factors must remain constant, such as the income of consumers, the price of related goods, and consumer tastes and preferences.

However, the assumption that "commodity's own price should remain constant" is incorrect because the law of demand examines how quantity demanded changes in response to changes in the commodity's own price.