# data[].attributes.body
The amount spent on a good or service is a measure of the cost when all other things are equal. If nothing else changes, customers will buy fewer of this when the price increases. They'll purchase more when the price reduces.
This relationship ensures that "all other factors remain equal." That factor is so important that economists use the Latin phrase ceteris paribus to describe it.
The law of demand can be used to determine why goods are priced the way they are. The law of demand is used by merchants every time they offer a sale, for example. In the short run, everything else is equal. Sales are very good at increasing demand. Customers are fast to respond to price reductions that are advertised.

# data[].attributes.attachment_link.readable_text
What Is the Law of Demand?

The law of demand is one of the most fundamental concepts in economics. It works with the law of supply to explain how market economies allocate resources and determine the prices of goods and services that we observe in everyday transactions.

The law of demand states that the quantity purchased varies inversely with price. In other words, the higher the price, the lower the quantity demanded. This occurs because of diminishing marginal utility. That is, consumers use the first units of an economic good they purchase to serve their most urgent needs first, then they use each additional unit of the good to serve successively lower-valued ends.

Key Takeaways

Understanding the Law of Demand

Economics involves the study of how people use limited means to satisfy unlimited wants. The law of demand focuses on those unlimited wants. Naturally, people prioritize more urgent wants and needs over less urgent ones in their economic behavior, and this carries over into how people choose among the limited means available to them.

For any economic good, the first unit of that good that a consumer gets their hands on will tend to be used to satisfy the most urgent need the consumer has that that good can satisfy.

For example, consider a castaway on a desert island who obtains a six-pack of bottled fresh water that washes up onshore. The first bottle will be used to satisfy the castaway's most urgently felt need, which is most likely drinking water to avoid dying of thirst.

The second bottle might be used for bathing to stave off disease, an urgent but less immediate need. The third bottle could be used for a less urgent need, such as boiling some fish to have a hot meal, and on down to the last bottle, which the castaway uses for a relatively low priority, such as watering a small potted plant to feel less alone on the island.

Because each additional bottle of water is used for a successively less highly valued want or need by our castaway, we can say that the castaway values each additional bottle less than the one before.

Similarly, when consumers purchase goods on the market, each additional unit of any given good or service that they buy will be put to a less valued use than the one before, so we can say that they value each additional unit less and less. Because they value each additional unit of the good less, they aren't willing to pay as much for it.

By adding up all the units of a good that consumers are willing to buy at any given price, we can describe a market demand curve, which is always sloping downward, like the one shown in the chart below. Each point on the curve (A, B, C) reflects the quantity demanded (Q) at a given price (P). At point A, for example, the quantity demanded is low (Q1) and the price is high (P1). At higher prices, consumers demand less of the good, and at lower prices, they demand more.

Demand vs. Quantity Demanded

In economic thinking, it is important to understand the difference between the phenomenon of demand and the quantity demanded. In the chart above, the term "demand" refers to the light blue line plotted through A, B, and C.

It expresses the relationship between the urgency of consumer wants and the number of units of the economic good at hand. A change in demand means a shift of the position or shape of this curve; it reflects a change in the underlying pattern of consumer wants and needs vis-à-vis the means available to satisfy them.

On the other hand, the term "quantity demanded" refers to a point along the horizontal axis. Changes in the quantity demanded strictly reflect changes in the price, without implying any change in the pattern of consumer preferences.

Changes in quantity demanded just mean movement along the demand curve itself because of a change in price. These two ideas are often conflated, but this is a common error-rising (or falling) prices don't decrease (or increase) demand; they change the quantity demanded.

Factors Affecting Demand

So what does change demand? The shape and position of the demand curve can be affected by several factors. Rising incomes tend to increase demand for normal economic goods, as people are willing to spend more. The availability of close substitute products that compete with a given economic good will tend to reduce demand for that good because they can satisfy the same kinds of consumer wants and needs.

Conversely, the availability of closely complementary goods will tend to increase demand for an economic good because the use of two goods together can be even more valuable to consumers than using them separately, like peanut butter and jelly.

Law of Supply

Supply is the total amount of a specific good or service that is available to consumers at a certain price point. As the supply of a product fluctuates, so does the demand, which directly affects the price of the product.

The law of supply, then, is a microeconomic law stating that, all other factors being equal, as the price of a good or service rises, the quantity that suppliers offer will rise in turn (and vice versa). When demand exceeds the available supply, the price of a product typically will rise. Conversely, should the supply of an item increase while the demand remains the same, the price will go down.

What is a Simple Explanation of the Law of Demand?

The law of demand tells us that if more people want to buy something, given a limited supply, the price of that thing will be bid higher. Likewise, the higher the price of a good, the lower the quantity that will be purchased by consumers.

Why Is the Law of Demand Important?

Together with the law of supply, the law of demand helps us understand why things are priced at the level that they are, and to identify opportunities to buy what are perceived to be underpriced (or sell overpriced) products, assets, or securities. For instance, a firm may boost production in response to rising prices that have been spurred by a surge in demand.

Can the Law of Demand Be Broken?

Yes. In certain cases, an increase in demand doesn't affect prices in ways predicted by the law of demand. For instance, so-called Veblen goods are things for which demand increases as their price rises, as they are perceived as status symbols. Similarly, demand for Giffen goods (which, in contrast to Veblen goods, aren't luxury items) rises when the price goes up and falls when the price falls. Examples of Giffen goods can include bread, rice, and wheat. These tend to be common necessities and essential items with few good substitutes at the same price levels.

The Bottom Line

The law of demand posits that the price of an item and the quantity demanded have an inverse relationship. Essentially, it tells us that people will buy more of something when its price falls and vice versa. When graphed, the law of demand appears as a line sloping downward.

This law is a fundamental principle of economics. It helps to set prices, understand why things are priced as they are, and identify items that may be over- or underpriced.

# data[].attributes.attachment_link.title
What Is the Law of Demand in Economics, and How Does It Work?

# data[].attributes.attachment_link.description
The law of demand states that quantity purchased varies inversely with price. In other words, the higher the price, the lower the quantity demanded.

# data[].attributes.body
When prices vary, the law of demand governs consumer behaviour. When the price of a good rises in the market, while all other factors affecting demand remain constant, the demand for that good falls. This is a normal consumer decision-making process. This occurs when a customer is hesitant to spend more on a product because they are afraid of running out of money.
According to the rule of demand, if all other parameters remain constant, the relative price demand of any service or product are inversely connected. Whenever the price of a thing rises, the demand for that product will drop.

# data[].attributes.attachment_link.title
What is Law Of Demand? Definition of Law Of Demand, Law Of Demand Meaning - The Economic Times

# data[].attributes.attachment_link.description
Law Of Demand definition - What is meant by the term Law Of Demand ? meaning of IPO, Definition of Law Of Demand on The Economic Times.

# data[].attributes.body
When all other factors are equal, the amount purchased of a good or service is a function of price. When the price of something rises, consumers will buy less of it if nothing else changes. When the price drops, they'll buy more.
"all other things stay equal," this relationship maintains. That element is so crucial that economists use the Latin term ceteris paribus to express it.
We can use the law of demand to figure out why things are priced the way they are. Every time a merchant offers a sale, for example, they employ the law of demand. Everything else is equal in the near term. Sales are particularly effective in generating demand. Customers react quickly to price reductions that are promoted.

# data[].attributes.attachment_link.description
The law of demand states that the quantity demanded of a good shows an inverse relationship with the price of a good when other factors are

# data[].attributes.body
The website demonstrates demand elasticity. Demand curves come in a variety of shapes and sizes, each with its own flexibility. It will influence how prices vary along the curve, for example, in inelastic demand, a very big price rise is required to effect quantity demand.

It's easy to understand how an increase in a product's price affects our purchase habits. There are many replacements for some elastic commodities, such as soft drinks, thus the elasticity is great. Other beverages, such as milk or juice, are available. We must use less substitution for other inelastic products, such as gas. As a result, even though petrol prices are rising, we have no choice but to pay more.

# data[].attributes.attachment_link.readable_text
The law of demand states that all other things being equal, the quantity bought of a good or service is a function of price.

Learn more about the law of demand, how it works, and the way it fits into the business cycle.

Definition and Examples of the Law of Demand

According to the law of demand, the quantity bought of a good or service is a function of price-with all other things being equal. As long as nothing else changes, people will buy less of something when its price rises. They'll buy more when its price falls.

This relationship holds true as long as "all other things remain equal." That part is so important that economists use a Latin term to describe it: ceteris paribus.

The law of demand can help us understand why things are priced the way they are. For example, retailers use the law of demand every time they offer a sale. In the short term, all other things are equal. Sales are very successful in driving demand. Shoppers respond immediately to the advertised price drop. It works especially well during massive holiday sales, such as Black Friday and Cyber Monday.

How the Law of Demand Works

There are two main ways to visualize the law of demand: the demand schedule and the demand curve.

The demand schedule tells you the exact quantity that will be purchased at any given price. The demand curve plots those numbers on a chart. The quantity is on the horizontal or x-axis, and the price is on the vertical or y-axis.

If the amount bought changes a lot when the price does, then it's called elastic demand. An example of this could be something like buying ice cream. If the price rises too high for your preference, you could easily purchase a different dessert instead.

If the quantity doesn't change much when the price does, that's called inelastic demand. An example of this is gasoline. You need to buy enough to get to work, regardless of the price.

The factors that determine the level of demand are called "determinants." These are also part of the "all other things" that need to be equal under ceteris paribus. The determinants of demand are the prices of related goods or services, income, tastes or preferences, and expectations.

If the other determinants change, then consumers will buy more or less of the product even though the price remains the same. That's called a shift in the demand curve.

The Law of Demand and the Business Cycle

Politicians and central bankers understand the law of demand very well. The Federal Reserve operates with a dual mandate to prevent inflation while reducing unemployment.

During the expansion phase of the business cycle, the Fed tries to reduce demand for all goods and services by raising the price of everything. It does this with contractionary monetary policy. It raised the fed funds rate, which increases interest rates on loans and mortgages.

Of course, when prices go up, so does inflation. But that's not always a bad thing. The Fed has a 2% inflation target for the core inflation rate. The nation's central bank wants that level of mild inflation. It sets an expectation that prices will increase by 2% a year. Demand increases because people know that things will only cost more next year. They may as well buy it now, ceteris paribus.

During a recession or the contraction phase of the business cycle, policymakers have a worse problem. They've got to stimulate demand when workers are losing jobs and homes and have less income and wealth. Expansionary monetary policy lowers interest rates, thereby reducing the price of everything. If the recession is bad enough, it doesn't reduce the price enough to offset the lower income.

In that case, expansionary fiscal policy is needed. During periods of high unemployment, the government may extend unemployment benefits and cut taxes. As a result, the deficit increases because the government's tax revenue falls. Once confidence and demand are restored, the deficit should shrink as tax receipts increase.

# data[].attributes.attachment_link.title
The Law of Demand Explained Using Examples in the U.S. Economy

# data[].attributes.attachment_link.description
The law of demand states that all other things being equal, the quantity bought of a good or service is a function of price. Learn more about the law of demand, how it works, and the way it fits into the business cycle.

# data[].attributes.body
it mentions the basis of the law of demand when price increase quantity will decrease with an example.  with all price spots of the chocolate, its links to a line of demand curve

it also mentions at the end of the video that there will be some factors other than price will affect the damnd of price, which shift to the right ( you want more of it ). such as the musician you like eating that chocolate.

# data[].attributes.body
With an example, it explains the premise of the law of demand, which states that as prices rise, quantity decreases. All of the chocolate's pricing points are connected to a demand curve.

It also adds at the end of the film that various factors other than pricing will influence the price, which is move to the right.

# data[].attributes.attachment_link.readable_text
In this video, we're going to talk about the law of demand, which is one of the core ideas of microeconomics. And lucky for us, it's a fairly intuitive idea. It just tells us that if we raise the price of a product, that will lower the quantity demanded for the product. Quantity demanded will go down. And you could imagine the other side of that. If we lower the price of a product, that will raise the quantity demanded of that product. And the law of demand says this just kind of generally. What we'll see in a few videos from now is that there are some exceptions to this. But to make this little concrete, let's think about the demand for a certain product. And one thing I want to clear here, and I'm going to go through great pains to not mess this up, is that when we talk about the word demand in a formal economic sense, we're not talking about a quantity. We're actually going to talk, all else equal, ceteris paribus, the relationship between price and quantity demanded. If we talk about an actual quantity, we should say the quantity demanded. So demand versus quantity demanded. These are two different things. And if it's a little confusing to you right now, hopefully by the end of this video, the difference between demand and quantity demanded will become a little bit clearer. And definitely over the next few videos, because in this video, we're going to focus on how the quantity demanded changes relative to the price. In future videos, we'll talk about how the entire relationship, how demand changes based on different factors. But to make things concrete, let's say I'm about to release my science fiction book, Space Whatever. I don't know, the book that I want to release. So I'm going to release some ebook. And we've done some market study, or we just know how the demand is related to price or the price is related to demand. And we're going to show that in a demand schedule, which is really just a table that just shows how the price-- and, actually I just made my first mistake. I just said how price relates to demand. I should say how price relates to quantity demanded and how quantity demanded relates to price. So demand schedule, it shows a relationship between price and quantity demanded, all else equal. So we're going to have multiple scenarios here. So this column, let me do my scenarios. In this column, let me put my price. In this column, I put my quantity demanded. So scenario, let's call this scenario A. I could price my book at $2. And I'll get a ton of people downloading it at that price. So I will get 60,000 people download my book at that price, my ebook. Scenario B, I could raise the price by $2. So it's now $4. And that kills off a lot of the demand. Now the quantity demanded goes down to 40,000 people downloading it. Then I can go to scenario C, if I raise it by another $2. So now I'm at $6. Now that lowers the quantity demanded to 30,000. I'll do a couple more of these. Scenario D, I raise another $2. So I get to $8 now. Now the quantity demanded goes down to 25,000. And I'll do one more of these. Let me see, what color have I not used yet. I haven't used yellow yet. Scenario E, if I raise it to $10, now the quantity demanded, let's just say, is 23,000. So this relationship shows the law of demand right over here. And this table that shows how the quantity demanded relates to price and vice versa, this is what we call a demand schedule. Now we can also, based on this demand schedule, draw a demand curve. And really, we're just going to plot these points and draw the curve the connects them. Because these aren't the only scenarios. Anything in between is possible. We could charge $2.01 for the book. We could charge for $4.50 for the book. And so that's what the demand curve captures a little bit better, because it's a continuous curve, not just five points. So let's do that. Let's graph it. And this is one of those conventions of economics that I am not a fan of. Because people often talk about changing the price, and how the quantity demanded changes from that. And in traditional-- in most of math and science, the thing that you're changing, you normally put on the horizontal axis. So if I was in charge of the convention of economics, I would plot price on the horizontal axis right over here. But the way it's done typically is that price is done on the vertical axis. And so you're used to seeing it in kind of a traditional class environment. I'll do the same. So we'll put price in the vertical axis, and we'll put quantity demanded in the horizontal axis. And our quantity demanded goes all the up to 60,000. So let's see, that's 10, 20, 30, 40, 50, 60. So that's 10-- this is in thousands-- 20, 30, 40-- sorry, not 45-- 40, 50, and 60. And this is in thousands. And then the price goes up to $10, from $2 to $10. So let's say this is 2, 4, 6, 8, and 10. So let's plot the scenarios. So scenario A, price is $2, 60,000 units are demanded. That is scenario A right over there. Scenario B, when the price is $4, 40,000 units are demanded. And that's right over there. That's scenario B. Scenario C, $6, 30,000 units. Right over there, scenario C. Scenario D, $8, 25,000 units. $8, 25 is right about there. That looks like 25,000, right in between. That's close enough. So that right over there is scenario D. And then finally scenario E, $10, 23,000 units. So it might be something like that. That is scenario E. And so we could actually have prices anywhere in between that. And maybe we could even go further. So this right over here. So if I were to draw the demand curve, it could look something like this. The demand curve would look something-- I'm trying to do my best to draw it as a straight continuous line-- could look something like that. And it could keep going on and on. And so these are two ways to show demand. So just going back to what I said earlier, the quantity demanded is, all else equal for a given price, how many units people are willing to download or buy of my ebook. When we talk about the demand itself, we're talking about this entire relationship. So this demand itself is this entire demand schedule. Or another way to think of it is this entire demand curve. If demand were to change, we would actually have a different curve. This curve would shift, or the entries in this table would shift. If the quantity of demand changes-- so we move along this curve when you hold everything else equal and you only change price. So hopefully that makes it clear. When everything else is equal, and you're only changing price, you're not changing demand, you're changing the quantity demanded. The demand, because everything else is equal, is this relationship. In the next few videos, we'll think about what does happen when you do change some of those other factors.

# data[].attributes.attachment_link.title
Law of demand definition and example (video) | Khan Academy

# data[].attributes.attachment_link.description
In this video, we're going to talk about the law of demand, which is one of the core ideas of microeconomics. And lucky for us, it's a fairly intuitive idea. It just tells us that if we raise the price of a product, that will lower the quantity demanded for the product.

# data[].attributes.body
If nothing else changes, a fall in the price of a good will lead to a rise in the amount required, and vice versa. When the price rises, the amount demanded falls.

# data[].attributes.body
the photo shows the elastic of demand. there are several types of demand curve with different elasticity.it will affect how the price changes along the curve such as in inelastic demand, we need a very large price increase to affect the quantity demand.

It is not hard to see how the increase in the price of the product, affect our purchasing habit. For some elastic goods such as soft drinks, there are lots of substitutes, therefore the elasticity is high. We can drink other stuff such as milk, or juice. For other inelastic products, such as gas. we have to sue it with less substitute. Therefore even gas price is up, we have no choice but pay more.

# data[].attributes.body
As the example on the video, the local farmer selling the corn at the price of $5 so the buyer with $50 can buy 10 bushels. As the price goes down to $4, the buyer will attend to get more with the new lower price. Moreover, marginal utility is what makes consumer want to buy the good with the low price than the average price.

# data[].attributes.body
This photo shows the demand of the good and the price that will effect it.