It’s not just the law of demand, it is paired with the law of supply, no?
Blizzard is the only supplier for their market, assuming they have the market cornered they can raise the prices as high as they want until they meet whatever profit margin they’re after from their dwindling playerbase. If Blizz thinks they can get away with hiking prices up, there’s no substitutes for players to buy from so they either pay up or don’t.
I assume Blizzard has done the math and decided their prices are the market equilibrium for D4.
It’s not as if having more players magically allows them to charge more, the “demand” will always be the amount people are willing to pay for a product.