What does the Law of Demand describe?
Understand the Problem
The question is asking for an explanation of the Law of Demand, which involves the relationship between the price of a good and how much of it consumers are willing to buy. The answer choices provide different aspects of economic theory that might relate to this concept.
Answer
The law of demand describes an inverse relationship between price and quantity demanded.
The law of demand describes the inverse relationship between price and quantity demanded, stating that a higher price leads to a lower quantity demanded, and a lower price leads to a higher quantity demanded.
Answer for screen readers
The law of demand describes the inverse relationship between price and quantity demanded, stating that a higher price leads to a lower quantity demanded, and a lower price leads to a higher quantity demanded.
More Information
The law of demand is a fundamental principle in economics that helps explain consumer behavior in relation to changes in price. It's graphically represented by the demand curve, which usually slopes downward.
Tips
A common mistake is confusing the law of demand with the law of supply. The law of supply states that a higher price leads to a higher quantity supplied.
Sources
- The Law of Demand | Introduction to Business - courses.lumenlearning.com
- What Is the Law of Demand in Economics, and How Does It Work? - investopedia.com
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