Introduction

When we dealt with the law of demand, we asked what happens if the price of a good or service changes. We concluded that as the price of a good or service decreases, the quantity demanded will increase, and as the price of a good or service increases, the quantity demanded decreases – ceteris paribus.

As the price declines a downward movement occurs

As the price increases an upward movement occurs

A change in the price of a good or service therefore causes a change in the quantity demanded and is represented by a movement along the demand curve for the good or service.