Law of Demand

An economic law that states that there is an inverse, or negative, relationship between the price that consumers are willing and able to pay and the quantities that they desire to purchase.

According to the law of demand a higher price for a good or service leads people to demand a smaller quantity, other things equal. For instance, if the price of running shoes increases from U.S. $40 to U.S. $50 then the amount of running shoes demanded will decrease, say from 100 to 80.