Podcast
Questions and Answers
What did Prof. Alfred Marshall define as the nature of the relationship between quantity demanded and price?
What did Prof. Alfred Marshall define as the nature of the relationship between quantity demanded and price?
- Irrelevant relationship
- Inverse relationship (correct)
- Direct relationship
- No relationship
Which of the following is NOT assumed to be equal or constant in the law of demand?
Which of the following is NOT assumed to be equal or constant in the law of demand?
- Income of consumers
- Production costs (correct)
- Prices of related commodities
- Consumer preferences
According to the law of demand, what happens to the quantity demanded when the price of a good rises?
According to the law of demand, what happens to the quantity demanded when the price of a good rises?
- It fluctuates
- It increases
- It remains the same
- It falls (correct)
When might the inverse price-demand relationship not hold good according to the law of demand?
When might the inverse price-demand relationship not hold good according to the law of demand?
What is an important assumption of the law of demand regarding factors that determine demand?
What is an important assumption of the law of demand regarding factors that determine demand?
Study Notes
Law of Demand
- Alfred Marshall defined the law of demand as an inverse relationship between quantity demanded and price.
- The key assumption is that all other factors that influence demand remain constant or equal.
- This means that as the price of a good increases, the quantity demanded decreases, and vice versa.
- This inverse relationship holds true under the assumption that all other factors influencing demand remain constant, such as income, tastes, and prices of related goods.
- The law of demand does not hold true when these other factors are allowed to vary. This means that if other factors are changing simultaneously, the inverse relationship between price and quantity demanded may not be observed.
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Description
Test your understanding of the law of demand in economics with this quiz. Explore the relationship between quantity demanded and the price of a product, as defined by Prof. Alfred Marshall.
