Basic Assumptions Of Law Of Demand
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 follows: Image Credits © Gaurav Akrani. No change in the income. No change in size and composition of the population. No change in prices of related goods. No change in consumer's taste, preference, etc. No expectation of a price change in future. No change in the climatic conditions. Now let's discuss each assumption of the law of demand one by one. 1. No change in the income The first assumption regarding the law of demand to operate is that the income of the consumer must remain same or should not change (i.e. neither rise nor fall). Income is assumed to remain consta...