1. No change in income
level of the consumer:if
the law of demand is to operate, consumers’ income remain constant. If there is
rise in income, people may demand more at higher prices.
2. No change in Consumer’s Taste, Preference
and habit: -It is
assumed that consumers’ habits, preferences, attitudes etc. remain unchanged.
In other words, there is no change in consumers’ choice for the product.
3. No change in prices of substitute goods: -A change in the price of substitutes
will affect the demand for the commodity. If the price of substitutes fall much
more the price of the commodity, people may not demand more of that commodity
even at lower prices.
4. No introduction of any substitutes: -it is also assumed that there is no introduction of
any new substitutes in the market.
5. No anticipation of price change in future: -It is also assumed that people do not anticipate any
further change in the price in the near future. If people expect a further rise
in price, they may demand more even the existing high price. Similarly, if
people expect a further fall in price, they may not buy more even at the
existing low price.
6. No change in Size, sex and age composition
of the population: -It
is assumed that the size and composition of the population remain unchanged.
After all, it is the population of a country that constitute the total market
demand for a product. So any change in the size and composition of population
of a country affect the total market demand for a product.
7. No change in the taxation policy of the
government: -
Government policies on direct and indirect taxes have great impact on demand for
various goods and services. Therefore, it is assumed that there is nochange in
government policy on taxation.
