Which statement best explains the law of demand?

AThe quantity demanded by consumers increases as prices rise, then decreases as prices fall.
BThe quantity demanded by consumers decreases as prices rise, then increases as prices fall.
CThe quantity demanded by producers increases as prices rise, then decreases as prices fall.
DThe quantity demanded by producers decreases as prices rise, then increases as prices fall.

Question

03-11-2026
Social Studies

Answered

Which statement best explains the law of demand?

AThe quantity demanded by consumers increases as prices rise, then decreases as prices fall.
BThe quantity demanded by consumers decreases as prices rise, then increases as prices fall.
CThe quantity demanded by producers increases as prices rise, then decreases as prices fall.
DThe quantity demanded by producers decreases as prices rise, then increases as prices fall.

Verified Answer :

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GinnyAnswer GinnyAnswer · Answer 1 · 2026-11-03T22:41:55-05:00

Final answer:

The law of demand states that the quantity demanded by consumers decreases as prices rise and increases as prices fall. This reflects an inverse relationship between price and quantity demanded. Understanding this concept helps explain consumer behavior in response to price changes.

Explanation:

Understanding the Law of Demand

The law of demand is a fundamental principle in economics that describes the relationship between the price of a good and the quantity demanded by consumers. It states that the quantity demanded by consumers decreases as prices rise, and conversely, the quantity demanded increases as prices fall. This inverse relationship can be explained by the substitution effect and the income effect.

For example, if the price of a popular brand of shoes increases, consumers may decide to either purchase less of that brand or switch to a more affordable alternative. On the other hand, if the price of those shoes decreases, more consumers are likely to buy them, leading to an increase in quantity demanded.

As prices increase, consumers may find alternatives and reduce their quantity demanded.

As prices decrease, the purchasing power of consumers increases, thus leading to a higher quantity demanded.

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