Law Of Demand
| The law of demand is the economic principle that describes the relationship between the quantity of a good that a consumer is willing to purchase and the price of that good. In general, as the price of a good increases, the quantity of the good that consumers are willing to purchase decreases. The law of demand is one of the most basic principles of economics and it is typically represented by a downward-sloping demand curve. The law of demand is based on the idea of utility, which is a measure of the satisfaction that a consumer derives from a good or service. The higher the price of a good, the less utility a consumer is able to obtain from that good. As a result, they are less likely to purchase the good. The law of demand is also based on the concept of marginal utility, which is the additional satisfaction that a consumer derives from each additional unit of a good. As consumers purchase more of a good, the marginal utility of that good decreases. At some point, the marginal utility of the good will be less than the price of the good, and the consumer will be unwilling to purchase any more of the good. The law of demand is a fundamental principle of economics that has a wide range of applications. It can be used to understand consumer behavior, to predict changes in prices and quantities, and to make decisions about production and marketing. The law of demand is also a key component of many economic models, including the demand-supply model and the market demand model. |
Share this glosssary
