Derive the law of demand from the single commodity equilibrium condition ''Marginal utility = Price''. OR Derive the inverse relation between price of a good and its demand from the single commodity equilibrium condition 'Marginal utility = Price'.

Derive the law of demand from the single commodity equilibrium conditi

1.	Derive the law of demand from the single commodity equilibrium condition ''Marginal utility = Price''. OR Derive the inverse relation between price of a good and its demand from the single commodity equilibrium condition 'Marginal utility = Price'.
Answer» Solution :According to single commodity equilibrium condition, consumer purchases that MUCH quantity of a good at which marginal utility (MU) is EQUAL to price. Given, MU = price. Now suppose, price falls. It will make MU GREATER than the price and will encourage the consumer to BUY more. It shows that when price falls demand RISES.