Law of Demand

The price of a good or service is high the quantity demanded will decrease, but when they decrease, quantity demanded increases

Rules that Help Determine Demand

Diminishing Marginal Utility Real Income Substitution Effect

Diminishing Marginal Utility

Utility (Satisfaction) As you buy a product, your satisfaction/utility decreases. You will only buy a product until your utility falls below your price of that product. Food is a good example at an all you can eat buffet.

Income Effect If I cannot afford it, I will not buy it. Example- New Car or Computer that is out of price range to due salary cut.

Substitution Effect When someone buys less of something as the price rises and more of another. Example: Price of coffee goes up, so you buy tea instead.