[AngusE]

The Law of Demand in economics states that when a price fluctuates, demand is inversely related. However it has also been stated that if consumers demand more of a good its price will rise, less of a good its price will fall which is a positive relationship.
I'm confused as to how the law states of an inverse relationship and yet therein also lies a positive relationship.

Could someone please help to clarify this?

If people demand more of a product, firms will respond by hiking the price because of increased demand they can charge more? However as the price rises less and less is demanded as per the law? I this were true why would businesses even try a price hike, is there an ultimatum at which the benefit of the marginal increase in price is greater than the demand/price ratio the firm was previously producing at before?

Thank you.

[paraclete]

I think you need to place supply in the equation, prices do not just fluctuate in response to demand they also fluctuate in response to supply and the interaction of demand and supply govern price and the number of competitors is also a strong factor.

The inverse relationship you speak of is prices rise, demand falls, prices fall demand rises. The elasticity of demand also helps to determine price there is a point of indifference to price below which consumers will buy and above which consumers will be more selective