The law of demand implies that ?
Correct answer: B. as prices fall, quantity demanded increase
- A. as prices rise, demand decrease
- B. as prices fall, quantity demanded increase
- C. as prices fall demand increases
- D. as prices rise, quantity demanded increases
Explanation
The law of demand describes an inverse relationship between price and quantity demanded, with other factors held constant. Thus, a price fall causes an increase in quantity demanded, not necessarily an outward shift in demand.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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