What does the law of demand state?

The law of demand states that, all else being equal, as the price of a good or service decreases, the quantity demanded for that good or service increases. This relationship reflects the general consumer behavior where lower prices make a product more attractive to buyers, leading them to purchase more.

When evaluating the dynamics of this relationship, consumers are typically more willing and able to buy goods when they are less expensive, as lower prices can enhance purchasing power. In contrast, when the price rises, consumers tend to buy less, leading to a decrease in quantity demanded.

This principle is a fundamental concept in economics that helps explain market behaviors and pricing strategies. It illustrates why businesses must understand consumer reactions to price changes to effectively manage supply and demand in the market.