ICS FA ICom Notes Class XI Principles of Economics Price Determines the Demand

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Price Determines the Demand

The demand for the commodity is related to price. IT is always at a price. Prof. Beaham defines as under:

“The demand for anything at a given price is the amount of it which will be brought per unit of time at that price.”

Demand varies with price. It varies inversely with price. If the price rises the demand contracts and if the price falls the demand extends. This responsiveness depends on many factors the effective demand for necessaries generally do not change with price. In other words the effective demand for necessaries is inelastic. The may rise or fall but the effective demand for necessaries remain practically the same. The effective demand for comforts is elastic. In other words variation in for comforts is in perpotion to a change in price.