According to the Law of Demand, what relationship exists between price and quantity demanded?

The Law of Demand states that there is an inverse relationship between price and quantity demanded. This means that as the price of a good or service decreases, the quantity demanded by consumers tends to increase, and conversely, if the price increases, the quantity demanded typically decreases. The rationale behind this relationship is rooted in consumer behavior; when prices fall, products become more affordable, encouraging more consumers to purchase them. Conversely, higher prices can lead to decreased affordability, leading to a decline in demand.

This relationship is foundational in economics and illustrates how markets operate under the influences of price changes, impacting consumer choices and overall demand for goods and services. Understanding this principle is critical for analyzing market trends and consumer behavior.