The relationship between the quantity demanded and the price of a product/ service is simply straightforward. Increase in Quantity demanded leads to a decrease in price, and the decrease in quantity demanded results in an increase in price.
What is quantity demanded?
In Simple terms, quantity demanded is the quantity of product/commodity, the buyer is willing to buy for a particular price.
Let’s talk about an example that we will experience in day-to-day life.
Example 1.
At least once in your life, you might have come across a merchant selling a product for a lesser price when a customer buys it in more quantity.
| Quantity Demanded | Price/unit |
|---|---|
| 1 Shirt | 3$ |
| 3 Shirt | 2.80$ |
| 100 Shirt | 2$ |
In the above illustration, You see the price of the product decreases with when increase in the quantity of the product the customer buys. It means that the price is bound to reduce with the increase in the quantity demanded.
Example 2
A retailer gets to buy products in bulk from wholeslaer/manufacture for lesser price. It is simply because of the law of demand. This is well known real life example to understand the relation between the quantity demanded and price.