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In Economics, constraints and limitations are an integral part of the analysis. Food, water and other kinds of resources are only some of the things that Economics seek to study. The Law of Demand is one of the main tools to conduct such study. Its applicability and usefulness is undeniable. To explain the main tenets of this Law, let us take for example a good – an orange. The Law of Demand says that if the price of an orange rises, the demand for it falls correspondingly. Why is this so? An explanation could say that since the income or resources of an individual is limited; the increase in the price of an orange could persuade a consumer to buy other goods that are relatively priced lower instead. Also, an increase in the price of an orange means that a consumer can only buy less number of oranges compared when the price of an orange is lower given the income constraints.
To further discuss the Law of Demand, let us use the movie theaters and how they sell tickets. It is common practice for movie theaters to sell tickets at lower prices during morning or first shows during weekends compared to their ‘regular’ priced weekday afternoon and weekends. This is mainly because of the fact that the fewer people go to the movie theaters during weekday mornings. Most people work or study during the day so these people choose to go the movie theaters on weekends or in the afternoon. The decrease in the price of the ticket may be a strategy to encourage people to buy a ticket when there are less people doing so. A lower price means more people could actually afford to buy the ticket. Accordingly, increasing the price of the tickets would discourage the people to actually go the movie theater and buy a ticket, hence, lowers the demand as well. Simply put, a lower demand for tickets means that prices are going to be lower.
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