2.2 : Law of Demand

The Law of Demand states that consumer demand decreases as the price of a product or service rises, given that all other factors remain constant. Noted economist Alfred Marshall eloquently summarized this principle: "The greater the amount to be sold, the smaller must be the price at which it is offered in order that it may find purchasers."

To illustrate this concept, consider a recent technological advancement: generative AI. When generative AI technology was first introduced, and its price was high, very few businesses adopted it due to the cost. As the price of implementing this technology decreased over time, more businesses were able to afford it, and utilization increased.

This scenario demonstrates the Law of Demand in action, showing the inverse relationship between price and quantity demanded. When visualized on a graph, with the quantity of generative AI on the X-axis and the price of generative AI on the Y-axis, the result is a downward-sloping curve known as the 'demand curve.'

The Law of Demand remains an essential tool in the economic world, influencing decision-making processes across various sectors.