The Law of Demand Quiz

The Law of Demand in Microeconomics

• The law of demand states that as the price of a good or service increases, the quantity demanded decreases, ceteris paribus (all other things being equal).

Direction of Change in Quantity Demanded

• The law of demand describes the direction of change in the quantity demanded as inverse, meaning that when the price increases, the quantity demanded decreases, and vice versa.

Demand Curve Representation

• The demand curve is represented as a downward sloping curve, indicating the inverse relationship between price and quantity demanded.

Alfred Marshall's Statement on Consumer Behavior

• Alfred Marshall's statement that "an increase in the price of a commodity is followed by a decrease in the amount demanded" implies that consumers will purchase more of a good or service when its price decreases, and less when its price increases, indicating a rational response to changes in price.

Price and Quantity Demanded Relationship

• The law of demand describes a negative relationship between price and quantity demanded, meaning that as the price increases, the quantity demanded decreases.

Significance of the Law of Demand

• The law of demand is a fundamental principle in microeconomics, helping to understand how consumers respond to changes in price and how markets allocate resources.

Graphical Representation

• The law of demand is graphically represented using a downward sloping demand curve, which illustrates the inverse relationship between price and quantity demanded.

Defining Demand Curves

• Demand curves are defined as a graphical representation of the relationship between the price of a good or service and the quantity demanded, with the curve sloping downward to the right.

Test your understanding of the law of demand in microeconomics with this quiz. Explore the inverse relationship between price and quantity demanded and sharpen your knowledge of this fundamental economic principle.