What is the Law of Demand?
- First of all, demand is the willingness for consumers to pay for goods and services
- Law of demand is the principle that states if prices go up demand goes down. Inversely, if prices go down then demand goes up
Life Application/Analogy
Think of it as you are shopping for new clothes. If you notice your favorite shirt went up in price then you are less willing to buy it, but if you find out the shirt is on sale then you are more willing to buy it.
Understanding the Graph
- Simply put, the higher the value on the y-axis (the price), the lower the value on the x-axis (demand)
- As the graph moves to the right price decreases as the quantity demanded increases, displaying the law of demand in effect
How do I remember it?
I think the Law of Demand is very simple to remember because it is a basic human trait. You are more likely to purchase or want an item if it is cheaper, but if the price goes up you would be less likely to buy it.
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