almost always decreases the quantity demanded of that good or service. Conversely, a fall in price will increase

the quantity demanded. When the price of a gallon of gasoline increases, for example, people look for ways to

reduce their consumption by combining several errands, commuting by carpool or mass transit, or taking

weekend or vacation trips closer to home. Economists call this inverse relationship between price and quantity

demanded the law of demand. The law of demand assumes that all other variables that affect demand (which

we explain in the next module) are held constant.

We can show an example from the market for gasoline in a table or a graph. Economist call a table that shows

the quantity demanded at each price, such as Table 3.1, a demand schedule. In this case we measure price in

dollars per gallon of gasoline. We measure the quantity demanded in millions of gallons over some time period
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