What is the effect of an increasing price on quantity demanded according to the law of demand?

The law of demand states that there is an inverse relationship between price and quantity demanded. This means that when the price of a good or service increases, consumers typically buy less of that good or service, leading to a decrease in the quantity demanded.

This occurs because higher prices tend to discourage consumers from purchasing as much due to the diminishing utility they gain from each additional unit, as well as potential substitution effects where consumers may seek alternative products that offer similar benefits at a lower price. Therefore, when the price increases, fewer consumers are willing or able to purchase the good, resulting in a decrease in quantity demanded.

Understanding this fundamental principle helps explain consumer behavior in response to price changes and is essential for analyzing market dynamics.