PRESENTATION OUTLINE
Definition:
Economic law that states that consumers buy more of a good when it's price decreases and less when it's price increases
Definition Explanation:
The law of demand states that all other things being equal, there will be less demand for higher priced goods and services. You only have so much money to spend, and if the price of something goes up, you can afford less of it.
Example #1
When shirts go on sale, you might buy three instead of one. The amount that you demand increases because the price has fallen.
Example #2
When plane tickets become more expensive, you’re less likely to travel by air and more likely to choose the less expensive options of driving or staying home.
Example #3
When Starbucks raises the price of a coffee from $1.75 to $2.25, the quantity of coffee demanded will decrease. Less people will buy coffee because of the price increase.
The law of demand is the result of not one pattern of behavior, but of two separate patterns that overlap which are the substitution effect and the income effect.
