The law of demand states that, the higher the price of a good or service, the less of these products consumers are willing to purchase, ceteris paribus. As the price of these goods and services fall, the more of these products consumers are willing to purchase, ceteris paribus.

Figure 3.1

Above is a demand curve; it shows the relationship between price and quantity demanded, ceteris paribus.

The demand curve depicts the law of demand, and shows that, when the price of a good or service is at a high price, P₁, the quantity demanded will be low, Q₁. When the price is lower at P₃, the quantity demanded will increase to Q₃.

Note:

1. Because the quantity demanded increases as the price decreases, the demand curve has a negative slope

2. The change in price resulted in a movement along the demand curve.