Answer to Question #178217 in Economics for andromy

Question

Please give me the general concept of the Law of Demand and explain why it behaves that way.

Your answer

Answer 1

The law of demand is a fundamental principle of economics that states that at a higher price consumers will demand a lower quantity of a good.

If movie ticket prices declined to $3 each, for example, demand for movies would likely rise. As long as the utility from going to the movies exceeds the $3 price, demand will rise. As soon as consumers are satisfied that they've seen enough movies, for the time being, demand for tickets will fall.