What is the law that states quantity demanded falls as price rises?

The law of demand states that, all else being equal, quantity demanded falls as price rises. Conversely, a lower price generally increases the quantity consumers are willing and able to buy.

This inverse relationship is shown by a downward-sloping demand curve, with price on the vertical axis and quantity demanded on the horizontal axis. A price change causes movement along the existing curve; changes in income, tastes, expectations, or related-goods prices can shift the entire curve.

The qualification “all else being equal,” or ceteris paribus, is essential. The law describes a general tendency rather than the exact size of a response. Demand can also behave unusually for rare cases such as Giffen goods, while prestige or Veblen goods may attract some buyers at higher prices.

Charles Davenant discussed an early version in 1699, and Alfred Marshall formalized the familiar graphical treatment in Principles of Economics in 1890. The law of demand works with the law of supply to explain market equilibrium.