What is the law of demand?

by Girl Banker®
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Don't be surprised if you get asked economics question in an interview. They expect you to know certain basic economic concepts.

All things constant, as the price of a good or service falls, the quantity demanded rises. The demand curve is downward sloping.

Note that this relationship between price and quantity demanded is a general rule, but doesn’t always apply. For instance, luxury goods are commonly bought to signal one’s wealth or status. For such products, demand rises with price. These are Veblen goods.

There is a also a class of goods called inferior or Giffen goods whose demand rises with a rise in price. For example, in a poor country where people use matches to light up their cooking fires, if the cost of matches rises people will spend more on matches and cut out any "luxuries" that they have to in order to enable this because they need to cook their food and can't light their fires up any other way.

To Become an Investment Banker has a short economics section to ensure that you know all the basics.

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