In economics the demand for a good means not simply desire for it, but desire accompanied by the ability to pay the current price for it. In other words demand is effective desire. Willingness to pay without ability does not constitute economic demand. The law of demand is closely allied to the law of diminishing utility. It takes account of the fact that other things being equal, marginal utility decreases as the quantity of the good increases. The law states that the demand for a good increases as the price is lowered and decreases as the price is increased, or in other words the demand varies inversely with the price. It varies, of course, directly with the strength of the desire for the good and directly with the purchasing power of the buyers.

1 Compare the Thirty-second Report of the Bureau of Statistics of Labor, Massachusetts (1901), pp. 296-97.