According to the law of demand, what happens when prices decrease?

Multiple choice question for Supply and Demand. Select an option, then review the explanation below.

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Demand declines as prices go upThe quantity demanded rises when prices dropDemand grows as prices fallQuantity demanded increases as prices increase

Explanation

The law of demand states that when the price of a good decreases, the quantity demanded by consumers increases, assuming all other factors remain constant. This means a lower price leads to a higher quantity demanded, not necessarily an increase in overall demand.

Practice related questions from the same subject.

1.What is the typical shape of a demand curve?
2.What term describes a company earning profits beyond its normal profit level?
3.How does an increase in marginal cost affect output, and how does an increase in marginal revenue impact output?
4.Marginal revenue refers to the ________ resulting from producing an additional ________ of output.
5.What are firms generally assumed to do with their costs and profits?

According to the law of demand, what happens when prices decrease?

Explanation

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