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Lecture notes of 3 pages for the course ECON 101 at UManitoba (lecture notes)
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IntroductionThe law of demand is one of the most fundamental concepts in economics. It is a concept that is
studied by economists, policymakers, and businesses alike. The law of demand states that as
the price of a good or service increases, the quantity demanded of that good or service will
decrease, while as the price of a good or service decreases, the quantity demanded of that
good or service will increase. This law holds true for most goods and services, and it is an
essential principle that forms the basis of many economic models and theories.
This lecture note will explore the law of demand, its origins, and its applications in the real world.
We will examine the factors that affect the demand for a good or service, such as price, income
and the availability of substitutes. We will also discuss the limitations of the law of demand and
the circumstances under which it may not hold.
The Origins of the Law of Demand
The law of demand is a fundamental concept in economics, and it has been studied for
centuries. The earliest known mention of the law of demand can be traced back to the 14th
century, when Ibn Taymiyyah, a famous Muslim theologian, and philosopher, wrote about the
relationship between prices and the number of goods demanded. However, it was not until the
18th century that the law of demand was first described in a formal manner.
In 1767, the Scottish economist James Steuart published An Inquiry into the Principles of
Political Economy, in which he wrote about the inverse relationship between price and quantity
demanded. However, it was not until the publication of Adam Smith's The Wealth of Nations in
1776 that the law of demand was widely recognized and accepted.
Adam Smith was one of the most influential economists of his time, and he is often referred to
as the father of modern economics. In The Wealth of Nations, Smith wrote extensively about the
relationship between prices and the number of goods demanded. He observed that when the
price of a good or service increased, people would generally demand less of that good or
service, while when the price of a good or service decreased, people would generally demand
more of that good or service. Smith's observations formed the basis of the law of demand, which
has been a cornerstone of economic theory ever since.
The Law of Demand in Action
The law of demand is a fundamental principle that is observed in many different contexts. One
of the most common examples of the law of demand is the relationship between the price of a
good or service and the quantity demanded of that good or service.
For example, let's say that the price of a movie ticket increases from $10 to $15. According to
the law of demand, we would expect that the quantity of movie tickets demanded would
decrease, as people would be less willing to pay the higher price. Conversely, if the price of a
movie ticket decreases from $10 to $5, we would expect that the quantity of movie tickets
demanded would increase, as people would be more willing to pay the lower price.
The law of demand also applies to the market as a whole. If the price of a good or service
increases, we would expect that the quantity demanded of that good or service would decrease,
leading to a decrease in the overall demand for that good or service. Conversely, if the price of a
good or service decreases, we would expect that the quantity demanded of that good or service
would increase, leading to an increase in the overall demand for that good or service.
Demand is one of the fundamental concepts in economics. It refers to the relationship between
the price of a good and the quantity demanded of that good. Understanding demand is essential
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