Law of Demand
Definition
The law of demand states that as the price of a good or service increases, the quantity demanded decreases, and vice versa.
Related terms
Substitution Effect: When consumers switch to a different product due to a change in relative prices.
Income Effect: The change in quantity demanded due to a change in purchasing power caused by a change in price.
Elasticity of Demand: Measures how responsive quantity demanded is to changes in price.
"Law of Demand" appears in:
Subjects (1)
AP Macroeconomics
Study guides (1)
AP Microeconomics - 2.3 Price Elasticity of Demand
Additional resources (1)
AP Microeconomics - Unit 2 Overview: Supply and Demand
Practice Questions (2)
Which of the following statements is true about the Law of Demand?
What is the relationship between price and quantity demanded according to the Law of Demand?
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Resources
Cram Mode
AP Score Calculators
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Glossary
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Help Center
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.