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 INTRODUCTION Law of Demand merely tells us that there is an inverse relationship between price of a commodity and its quantity demanded. It is a qualitative statement which describes only the direction of change in demand with change in its price. MEANING A technical term elasticity of demand  is used to measure the degree of this responsiveness in the demand for a good to a change in its price, income or price of related commodity.         This concept was developed b economists like J.S.Mill, Cournot etc. but the credit of its scientific presentation goes to Marshall. PRICE ELASTICITY OF DEMAND Price elasticity of demand establishes a quantitative relationship between the quantity demanded of a commodity and its price while other factors remain constant. It is expressed as a proportion at which quantity demanded changrs with change in its price. Definition " The price elasticity of demand measures the responsiveness of the quantity demanded changes with the change in its price.

 National Income is the sum total of income accruing to a country from different economic activities in an accounting year. According to Circular Flow Model, National Income can be viewed from three different angels: 1) as an aggregate of value of goods and services produced in an economy. 2) as the sum total of income generated in an economy 3) as the aggregate of expenditure on the final goods and services. Accordingly, we have three methods of calculating National Income: 1. VALUE ADDED METHOD/ PRODUCT METHOD - Value added method calculates national                                                                                                                                       income in terms of value addition by each production unit in the economy during the period of a year. Value added (GDP at MP ) = Value of Output - Intermediate Consumption National Income ( NNP at FC ) =    GDP at MP                                                                             - Depreciation

 Let's understand the concept of Demand first. Demand refers to consumer's desire to purchase goods and services at given price. ALFRED MARSHALL propounded Theory of Demand. According to Theory of Demand,if price of a commodity increases then, its demand decreases and vice-versa. Theory of demand basically explains the inverse relationship between demand and price of the commodity. ASSUMPTIONS OF THEORY OF DEMAND: 1. No change in price of related goods. 2.No change in income of consumers. 3. No change in tastes and preferences of the consumers. 4. No expectations of consumer to change in price of commodity in near future. MEANING Theory of Demand introduces an inverse relationship between price and demand of a good or service, provided other factors are constant. Also as the price deceases its demand increases. This relationship is further illustrated with the help of following table and graph: So, it is clearly observed that with the increase in price of commodity X, its deman