Law of demand
Definition. The law of demand states that, other things being equal, as the price of a good rises the quantity demanded of it falls, and as the price falls the quantity demanded rises. This inverse relationship gives the demand curve its downward slope.
The relationship reflects the income effect and the substitution effect of a price change. The phrase other things being equal, or ceteris paribus, holds constant influences such as income, tastes and the prices of related goods.
This term belongs to Demand and Supply Analysis in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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