The law of demand states that, all else being equal, when the price of a good or service increases, the quantity demanded decreases, and conversely, when the price decreases, the quantity demanded increases. This inverse relationship between price and quantity demanded occurs because consumers tend to buy more of a good when it is cheaper and less when it is more expensive.

This principle is fundamental in economics and is often represented by a downward-sloping demand curve on a graph, illustrating how demand changes as price changes. The law of demand assumes other factors such as consumer preferences, income, and prices of related goods remain constant (ceteris paribus).