Law of Demand

When price of a good goes up, people buy less of it and when prices goes down, people buy more it, other things being unchanged, it is called Law of Demand.

Prof. Alfred Marshall states the law of Demand as under:
“For the higher sale of the amount of a commodity, its price should fall or when the price falls, the quantity demanded increases and on the contrary, when the price rises, the demand falls provided other things remain the same.”

If different factor like consumer’s income, taste of the consumer, traditions, fashion, habits, prices of the substitute goods etc. will change, the Law of Demand will fail to operate.

Economics by Adam Smith

Adam smith was a professor at university of Glasgow. He wrote his book, "An enquiry into the Nature and Causes of Wealth of Nations" in 1776. Adam Smith argued that if producer were free to seek profits by providing goods and services then the "invisible hand" of market forces would ensure that right goods and services were produced. He explained concept of Price system.

According to Adam Smith rights of private property and wealth are natural and moral rights. Adam Smith was in favor of accumulation of wealth and free trade policy. According to him "Economics is a study of causes of Wealth of Nations." He believed that trade in unregulated markets would maximize wealth of nations.