The law of demand is an economic principle that explains the negative correlation between the price of a good or service and its demand. If all other factors remain the same, when the price of a good or service increases, the quantity of demand decreases, and vice versa. When all other things remain constant, there is an inverse relationship, or negative correlation, between price and the demand for goods and services.
For example, suppose all factors remain constant and the price of oil is rising significantly. When the price of oil increases, the price of a plane ticket increases as well. This will cause a fall in the demand for plane tickets, because ticket prices may be too expensive for average consumers.
Suppose an individual wants to travel to a city 500 miles away, and the price of one plane ticket is $500 as opposed to $200 last year. She may be less likely to travel by air due to the increase in price. This causes her quantity demanded for an airplane ticket to decrease to zero. She is more likely to choose a more cost-effective way to travel, such as taking a bus or a train.
Similarly, when the price of a product decreases, the quantity demanded increases. For example, suppose the price oil significantly decreases instead. This cuts the costs for airline companies and causes a decrease in the prices of airplane tickets. If airline companies are now only charging $100 as opposed to $500 in the previous example, the quantity demanded will increase. The individual may demand five tickets now, as opposed to zero before, because the price of one airplane ticket to travel 500 miles was cut by 80%.
(For related reading, see "Introduction to Supply and Demand.")