The law of demand states that there is a negative relationship between price of a good and the quantity demanded ceteris paribus.
1. Explain the meaning of this statement.give practical example
The law of demand means that as the price of a good increases, the quantity demanded decreases, and vice versa. This relationship holds true assuming that all other factors affecting demand, such as income, tastes, and prices of related goods, remain constant.
For example, let's consider the market for a popular brand of sneakers. If the price of the sneakers increases, consumers are less likely to purchase them, leading to a decrease in the quantity demanded. On the other hand, if the price of the sneakers decreases, consumers are more likely to buy them, resulting in an increase in the quantity demanded. This demonstrates the inverse relationship between price and quantity demanded, as predicted by the law of demand.