whats law of demand
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law of demand
Definition
If supply is held constant, an increase in demand leads to an increased market price, while a decrease in demand leads to a decreased market price.
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The law of demand is an economic principle that states that, all other factors being equal, when the price of a good or service increases, the quantity demanded for that good or service decreases, and vice versa. In simpler terms, as the price of a product increases, people will demand less of it, and as the price decreases, people will demand more of it.
To understand the law of demand, you can observe the relationship between price and quantity demanded in a market. When the price of a product is high, fewer people are willing to pay for it, resulting in a lower quantity demanded. Conversely, when the price is low, more people are willing to purchase the product, leading to a higher quantity demanded.
To further illustrate this concept, you can conduct a demand curve analysis. This involves plotting the price of a product on the vertical axis and the quantity demanded on the horizontal axis. By collecting data on various price and quantity combinations, you can observe the pattern of how demand changes with price.
It's important to note that the law of demand assumes that all other factors affecting demand, such as income, preferences, and availability of substitutes, remain constant. If any of these factors change, it can shift the entire demand curve, altering the relationship between price and quantity demanded.