Law of Demand Economics describes the relationship between product price and consumer demand. In essence, when the price of a goods or service decreases, the demand for that good or service increases, and vice versa: when the price rises, the demand falls. This is because when the price is lower, more buyers can afford to purchase the product, while at higher prices, fewer people are able to make the purchase. Ultimately, this economic law suggests that demand shifts in response to changing prices – and so businesses must carefully consider their pricing strategies in order to maximize profitability.