Question

The "law of demand" is described as a "law" because, like the law of gravity, it describes a predictable pattern in how our world works. Let’s say you've decided to buy a shirt you really like because it's on sale. In fact, because this price is so good, you decide to buy two shirts in different colors. What would be the benefit to you of doing this? Why do you think that, over and over again, people are more likely to buy something (or more of something) when the price is lower? In your answer, discuss a real life example.

PLEASE HELP! 45 POINTS.

Answer 1

Answer:The law of demand states that there is a direct relationship between the price of a good and the demand for it. In particular, people generally buy more of a good when the price is low and less of it when the price is high. This is a general rule that applies to most goods called normal goods. As the price of a normal good increases, people buy less of it because they are usually able to switch to cheaper goods. An example is butter, which can be substituted for margarine when the price of butter increases. However there are certain goods that defy this general rule. One such category of goods is called "Giffen goods". With "Giffen goods", there are no cheap substitutes and these goods are so important to the livelihood of the consumer that he devotes overwhelmingly more of his income towards its purchase when the price increases. "Giffen goods" are extremely rare but one popular historical example of this phenomenon is potato during the Irish potato famine in the mid 19th century. It has also been suggested that gasoline may be an example of a modern day "Giffen good".

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Answer 2

One such category of goods is called "law of demand".The law of demand states that there is a direct relationship between the price of a good and the demand for it. This is a general rule that applies to most goods called normal goods. It has also been suggested that gasoline may be an example of a modern day "law of demand". With "law of demand", there are no cheap substitutes and these goods are so important to the livelihood of the consumer that he devotes overwhelmingly more of his income towards its purchase when the price increases.

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