Podcast
Play an AI-generated podcast conversation about this lesson
Questions and Answers
What is the relationship between price and demand in the 'Law of Demand'?
What is the relationship between price and demand in the 'Law of Demand'?
- Random relationship
- No relationship
- Directly proportional
- Inversely proportional (correct)
What happens to demand when prices decrease, according to the 'Law of Demand'?
What happens to demand when prices decrease, according to the 'Law of Demand'?
- Demand increases (correct)
- Demand decreases
- Demand becomes unpredictable
- Demand remains the same
Study Notes
Law of Demand
- The law of demand states that there is an inverse relationship between price and demand, meaning that as the price of a good increases, the demand for it decreases.
- Conversely, when the price of a good decreases, the demand for it increases.
- This means that when prices are high, consumers are less likely to buy, and when prices are low, consumers are more likely to buy.
- The law of demand assumes that all other factors, such as consumer preferences and income, remain constant.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge on the Law of Demand in economics and understand the relationship between price and demand. Explore what happens to demand when prices decrease according to this fundamental principle.
