Which principle states that as the price of a good falls, the quantity demanded increases?

The principle that states that as the price of a good falls, the quantity demanded increases is known as the Law of Demand. This relationship is fundamental in economics and illustrates the inverse relationship between price and quantity demanded: when prices decrease, consumers are generally more willing and able to purchase larger quantities of the good. This behavior occurs due to various factors, including increased affordability and buyer sentiment, which heightens demand at lower prices.

In market scenarios, this principle is confirmed by the downward-sloping demand curve on a graph, where the vertical axis represents price and the horizontal axis represents quantity demanded. The greater the decline in price, the greater the quantity that consumers are likely to buy, highlighting the responsiveness of consumer demand to price changes.

Understanding the Law of Demand is crucial in analyzing market behaviors and trends related to pricing, consumer choices, and overall market dynamics.