The Law of Demand

     The Law of Demand is an economic law that states that consumers buy more of a good when its price decreases and less when its price increases. One example, would be if Little Ceasars drops their hot-and-ready pizza price to one dollar causing them to sell out.

     On a demand curve, the quanity of a good or service varies inversely with the demand. When graphed, a demand curve has a negative curve, with price on the y-axis and quanity on the x-axis. Movement along the curve is caused by a change in price which equals a change in quanity demanded. A shift of the demand curve is caused by a change in one determinants of demand which equals a change in demand.

Determinants of Demand

change in

  • income
  • price of population
  • size and composition of population
  • price expectation
  • taxes and preferences

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