Desired quantity demanded is inversely, or negatively, related to price. A price increase leads to a decrease in desired quantity demanded, and a price decrease leads to an increase in desired quantity demanded. There are many reasons why we should expect the demand relationship to be negative. Let's consider two of the most obvious reasons.

1. As the price of a good or service falls, it becomes more affordable and as the price rises, it becomes less affordable. Part of the change in demand resulting from a price decrease is due to the fact that some consumers who could not afford to buy any of the good before the price drop can afford to buy at least one unit after the price falls. And, those who could afford the good before can afford to purchase more of it after the price falls. When the price of pizza falls from 10 to 5, the same amount of money now buys twice as much pizza, and those who have at least 5 but not 10 to spend can now afford at least one pizza. In the same way, when price increases some of the reduced quantity demanded is because some consumers can no longer afford to buy any of the good, while others who can still purchase some of the good can afford to buy less.

2. As the price of a good falls, it becomes cheaper relative to other similar goods and as the price rises, it becomes more expensive relative to alternative goods or services. When the price of pizza falls, it becomes cheaper relative to tacos or burgers than before. As its price rises, it becomes more expensive relative to tacos or burgers. When the price of a good falls, more will be purchased because it is substituted for more expensive alternatives, and when the price rises, less is purchased as less expensive but similar goods are chosen instead.