Law of Demand
In microeconomics, the idea that demand falls as prices rise and vice versa. For example, if prices for widgets rise, fewer people will buy widgets. See also: Supply and demand.
Law of Demand
What Does Law of Demand Mean?
A microeconomic law that states that all things being equal, as the price of a good or service increases, consumer demand for that good or service will decrease and vice versa.
Investopedia explains Law of Demand
This law summarizes the effect price changes have on consumer behavior. For example, a consumer will purchase more pizzas if the price of pizza falls. The opposite is true if the price of pizza rises.
Related Terms:
• Consumer Price Index—CPI
• Demand
• Law of Supply
• Macroeconomics
• Market Economy
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