Which law states that as price increases, quantity demanded decreases?

The Law of Demand is a fundamental principle in economics that captures the inverse relationship between price and quantity demanded. According to this law, when the price of a good or service increases, consumers tend to purchase less of it; conversely, when the price decreases, quantity demanded typically increases. This behavior reflects consumer preferences and the concept of substitution, where consumers may seek alternatives as prices rise.

This principle is visualized through a downward-sloping demand curve on a graph, where the x-axis represents quantity demanded and the y-axis represents price. As the price moves up the curve, the quantity demanded naturally declines due to these factors. Understanding this law is crucial for analyzing market dynamics and consumer behavior.

Other concepts, such as the Law of Supply or Law of Scarcity, address different aspects of market behavior. The Law of Supply illustrates how sellers are willing to offer more of a product at higher prices, and the Law of Scarcity pertains to the limited availability of resources relative to wants and needs. The Law of Equilibrium focuses on the point where the quantity supplied equals the quantity demanded. Each of these laws serves a specific purpose in economic theory, but it is the Law of Demand that specifically describes the relationship between increasing prices and decreasing quantity demanded.