What is a core principle behind the law of demand?

The core principle behind the law of demand is that as the price of a good or service decreases, the quantity demanded by consumers increases. This is primarily due to two effects: the substitution effect, where consumers will substitute a lower-priced good for others that are relatively more expensive, and the income effect, where lower prices effectively increase the purchasing power of consumers, allowing them to buy more of that good or service.

This relationship between price and demand is fundamental in economics, illustrating how consumers respond to price changes in the marketplace. When prices are lower, more consumers are willing and able to purchase the product, thus leading to an increase in demand. Conversely, as prices rise, demand tends to decrease as consumers either pull back on purchases or seek alternatives.

The other options do not accurately reflect the law of demand. They either describe relationships between income and demand, or production and prices, which are not directly related to the fundamental principle of the law of demand.