The inverse relationship between price and quantity demanded of a Essay

The inverse relationship between price and quantity demanded of a commodity - Essay Example This implies that as the price of a commodity increases, the quantity demanded for that product would reduce, similarly as the price decreases, the quantity demanded for that commodity would increase. Behravesh (2008) describes the inverse relationship between price and quantity demanded is a constant law in economics. There seem to be no real exception to the inverse relationship between price and quantity demanded as long as it is a commodity that consumers crave to get, this law would always hold its ground. The quantity demanded for a particular commodity depends on the price. The quantity demanded would begin to decrease when the suppliers or manufacturers decide to increase the price of the commodity. Consumers would begin to look for substitutes to these commodities that have a lower price and these means that the quantity demanded for a commodity that its price has just been decreased would begin to reduce drastically. The reason for the inverse relationship that exists betwe en price and quantity demanded is not far-fetched. There is always a price that consumers are willing to pay for a particular commodity and when there is a change in this price, they begin to change their mind. Some consumers may even look for other alternatives and this would affect the general quantity demanded for that commodity. ... ists between the price of a commodity and the quantity demanded is seen below: Quantity Demanded Price 600 100 300 200 150 400 75 800 40 1500 The effect that the increase in the price of a particular commodity would have on the quantity commodity is clearly shown above as an increase in the price would drive the quantity demanded downwards. However, there are exceptions to this law of demand as there are some commodities that the price of a commodity does not affect the quantity demanded for the same commodity. Drugs seem to be an essential commodity for sick people that the price of this commodity does not really affect the quantity demanded for that commodity. Consider a drug that has proven to be the most potent solution to a particular ailment and the price suddenly goes up. A patient that loves his or her life would pay anything to get that drug. Thus, an increase in the case of potent drugs would not in any way affect the quantity demanded for that drug. Hence, there are some e xceptions to the inverse relationship between price and the quantity demanded for a commodity as there are some commodities that some consumers can pay through the nose to get (Jones 2008, pp. 23-26). Another thing to consider is the income of consumers. The quantity demanded for a particular commodity may reduce and the price of that commodity may still remain constant. In this case, would we say that there is an inverse relationship between price and quantity demanded? The answer is no. the quantity demanded reduced due to the reduction in the income of the consumer as consumers would only buy what they can afford as they cannot in any way spend beyond their financial limits (O'Sullivan, Sheffrin, & Perez, 2010). Hence, this represents a somewhat exception in the law of demand’s inverse