CHARACTERISTICSOF ECONOMIC LAW
(1) ECONOMIC LAWS ARE CONDITIONAL: That
is why, at the end of the statement of each economic law it is always state
that “all other factors remain constant”. For example, the law of demand is
state as “ a rise the price of a commodity or service is followed by a
reduction in demand and a fall in price is followed by an increase in demand if
all other things remain constant”. The factor to remain constant here are
income of the consumer, state, fashion and prices of substitutes and complementary
goods. If these things change, law of demand will not prove to be true. For example
we see that income of a consumer does not remain constant. Instead it goes up. Therefore,
with an increase in income, a rise in the price of a commodity will not be
followed by a reduction in and law of demand will not hold. Thus, for their validity
all economic laws are always linked up with certain conditions.
(2) THEY LACKED EXAMCITITUDE ND
DEFINITION: A change in the economic, political and social environment of a
country can bring a change in the application of economic laws. For example,
economic situation of a country depend upon the forces of demand and supply
with keep on changing with the passage of time due to change in fashion, habits
and taste of the people. hence, we can say always a possibility that law of
demand will operate, but are never sure and definite about its application. Contrary
to it, laws of physical sciences definitely apply in all situation. For example
H2O will definitely make water. Thus, economic laws lack exactitude and
definiteness. According to Marshall, economic laws are uncertain like the of
ties rather than being definite like the simple laws of gravitation.
(3)THEY PREDICTABILTY: As mentioned
earlier economic laws depend upon assumption or “other factors being equal”. But
it is very difficult to keep all other constant in a free social life. Hence,
economic laws lack predictability. They are as unpredictable as earth quakes
and vice-versa, other things to remain constant i.e. production technique and
cost of production. But it is hard to keep these factors constant. Therefore,
it is not possible to predict a prospective change in supply in response to
change in supply in response to change in price.
(4) THEY ARE QUALITATIVE AND NOT
QUANTITATIVE: Economic laws are qualitative and not quantitative in nature. For
example in the case of law of demand, we say that a fall in the price of a
productive result in an increase in the demand of the product. But we cannot
say that a fall in the price of a product by 50% will result in an increase in
the demand of the product by 50%. Hence economic laws are expressed in
qualitative terms.
(5) THEY ARE STATEMENT OF
TENDENCIES: Economics laws represent economic tendencies of the people in
general. Therefore they are merely statement of tendencies or statistical
probabilities. Take the case of law of diminishing marginal utility. All of us
experience in very day life that the second glass of water gives us less
utility/satisfaction than the first one and so on. This general tendency on the
part of the people which enable economists
to make law of diminishing marginal utility. Hence economic laws are simply
statements of general economic tendencies.
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