What happens to the demand for a product when its price decreases?

When the price of a product decreases, the demand for that product typically increases. This phenomenon is based on the law of demand, which states that consumers are generally more willing and able to purchase more of a good or service when its price is lower, all else being equal. A lower price can make the product more attractive to buyers, leading to an increase in the quantity demanded.

In practical terms, lower prices can trigger more purchases as consumers see greater value in the product. This increase in demand is particularly relevant in competitive markets, as price reductions can attract additional customers who were previously unwilling or unable to purchase at a higher price.

Understanding this concept is crucial for businesses when implementing pricing strategies, as it can significantly affect sales volume and overall revenue.