The Law of Demand
Handwritten Notes & Diagrams — Economics Revision Notebook
ECONOMICS REVISION NOTES
, Introduction to the Law of Demand
✏️ Defining the Basic Principle
"As the price of a good rises, the quantity demanded falls — and vice versa — all other things being equal (ceteris
paribus)."
The Law of Demand is one of the most fundamental principles in economics. It describes the inverse relationship between
the price of a good or service and the quantity demanded by consumers in a given time period.
Key Terms to Know Why Does This Happen?
Demand: The desire and ability to purchase a good at Substitution Effect: Higher prices push consumers
various prices towards cheaper alternatives
Quantity Demanded: The specific amount wanted at Income Effect: Rising prices reduce real purchasing
one particular price power
Ceteris Paribus: "All other things held constant" Diminishing Marginal Utility: Each additional unit
gives less satisfaction
📝 Notebook Tip: Always distinguish between a change in quantity demanded (movement along the curve) and a
change in demand (shift of the entire curve).
Handwritten Notes & Diagrams — Economics Revision Notebook
ECONOMICS REVISION NOTES
, Introduction to the Law of Demand
✏️ Defining the Basic Principle
"As the price of a good rises, the quantity demanded falls — and vice versa — all other things being equal (ceteris
paribus)."
The Law of Demand is one of the most fundamental principles in economics. It describes the inverse relationship between
the price of a good or service and the quantity demanded by consumers in a given time period.
Key Terms to Know Why Does This Happen?
Demand: The desire and ability to purchase a good at Substitution Effect: Higher prices push consumers
various prices towards cheaper alternatives
Quantity Demanded: The specific amount wanted at Income Effect: Rising prices reduce real purchasing
one particular price power
Ceteris Paribus: "All other things held constant" Diminishing Marginal Utility: Each additional unit
gives less satisfaction
📝 Notebook Tip: Always distinguish between a change in quantity demanded (movement along the curve) and a
change in demand (shift of the entire curve).
