An example illustrating the Law of Demand

This is illustrated by moving along a demand curve when the price changes.

If I were shopping for shirts and had $40 to spend, I might purchase 2 shirts at $20 a piece. When I stumble on the discount shirt table and discover shirts on sale for $12.50, I might purchase 3 shirts and have $2.50 left over.

When I asked the saleswoman, "Which color shirts should I buy?"

She said, "Well, everyone needs a white shirt." (one shirt sold)

"And the blue is a good business shirt." (two shirts sold)

"And the pink really shows off your tan. Have you been going to the beach?" (three shirts sold)

"And then the teal brings out the blue in your eyes." (four shirts sold)

"And, of course, the yellow matches your teeth." (five shirts sold)

So through flattery, my demand schedule has shifted, so that at every price, I wanted more shirts.