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Law of Demand Principles

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Questions and Answers

What does the downward sloping demand curve indicate about the relationship between price and quantity demanded?

Quantity demanded is independent of price.

Higher prices lead to a decrease in quantity demanded. (correct)

Lower prices result in lower quantity demanded.

Higher prices result in higher quantity demanded.

What is the principle that provides an explanation for why the demand curve slopes downward?

The law of increasing marginal costs.

The law of comparative advantage.

The law of diminishing marginal utility. (correct)

The law of supply and demand.

According to the Law of Demand, what happens when a consumer faces a lower price for a commodity?

They will only buy the commodity if it is a necessity.

They are more willing to purchase more of the commodity. (correct)

They may purchase less of the commodity.

They are less willing to purchase the commodity.

What might cause a consumer to buy less of a commodity as its price increases?

<p>The satisfaction gained per additional unit decreases.</p> Signup and view all the answers

Which of the following best describes the Law of Demand?

<p>As the price of a good decreases, the quantity demanded increases.</p> Signup and view all the answers

Study Notes

Law of Demand

The demand curve slopes downwards, indicating that as the price of a good falls, the quantity demanded increases, and vice versa.
This negative relationship between price and quantity demanded is known as the Law of Demand.
The Law of Demand is explained by the principle of diminishing marginal utility.
Diminishing marginal utility means that as a person consumes more units of a good, the additional satisfaction (utility) they derive from each additional unit decreases.
As a result, consumers are willing to pay less for additional units of a good, leading to a downward sloping demand curve.

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Description

Explore the fundamentals of the Law of Demand in this quiz. Understand how the demand curve illustrates the relationship between price and quantity demanded, and discover the impact of diminishing marginal utility on consumer behavior. Test your knowledge on these essential economic concepts!