The law of demand states that the quantity demanded of a good shows an inverse relationship with the price of a good when other factors are held constant. It means that as the price increases, demand decreases.
The law of demand is a fundamental principle in macroeconomics. It is used together with the law of supply to determine the efficient allocation of resources in an economy and find the optimal price and quantity of goods.
The law of demand is usually represented as a graph. The graphical representation of the law of demand is a curve that establishes the relationship between the quantity demanded and the price of a good.
The shape of the demand curve can vary among different types of goods. Most frequently, the demand curve shows a concave shape. However, in many economics textbooks, we can also see the demand curve as a straight line.
The demand curve is drawn against the quantity demanded on the x-axis and the price on the y-axis. The definition of the law of demand indicates that the demand curve is downward sloping.
It is important to distinguish the difference between the demand and the quantity demanded. The quantity demanded is the number of goods that the consumers are willing to buy at a given price point. On the other hand, the demand represents all the available relationships between the good’s prices and the quantity demanded.