Final answer:
The law of demand indicates that a higher price results in a lower quantity demanded, while a lower price increases quantity demanded, assuming other factors remain constant. A movement along the demand curve is due to a change in price, while a shift in the demand curve is due to changes in other demand factors like consumer preferences or income.
Step-by-step explanation:
The law of demand states that, other things equal, the higher the price of a good, the lower the quantity demanded, and conversely, the lower the price, the higher the quantity demanded. This principle holds true as long as all other factors affecting demand remain unchanged, such as consumer preferences or income levels. It's important to note the difference between a movement along the demand curve and a shift in the demand curve. A movement along the curve occurs when there is a change in quantity demanded due to a price change. However, a shift in the demand curve indicates a change in demand at every price level, which could be caused by factors like changes in consumer preferences, income, or prices of substitute or complementary goods.
For example, if the price of a particular smartphone decreases, the law of demand suggests that more people will purchase the smartphone. If there is an overall increase in consumer preference for that smartphone, then the entire demand curve would shift to the right, representing an increase in demand at every price point. On the other hand, if consumers start preferring a different model or brand, the demand curve for the original smartphone could shift to the left, indicating a decrease in demand across all price points.