- Observe that the table shows an inverse relationship between price and quantity demanded: as price increases, quantity decreases.
- Analyze the options to determine which best describes this relationship between consumer demand and price.
- Conclude that the table illustrates how price influences the quantity consumers are willing to buy, which is known as the Law of Demand.
- The correct option is: \(\boxed{\text{how price affects how many goods consumers will buy}}\).
Explanation
- Analyzing the Relationship in the Data
The provided table presents a relationship between the 'Price per Backpack' and the 'Quantity Demanded'. By observing the data, we can see that as the price per backpack increases in increments of \(\$5\) (from \(\$20\) to \(\$40\)), the corresponding quantity demanded decreases in increments of \(10\) units (from \(50\) to \(10\)). This inverse relationship, where an increase in price leads to a decrease in the quantity that consumers are willing or able to purchase, is a fundamental principle in economics.
- Evaluating the Options
To identify what the table shows, we analyze the options provided:
- 'How supply affects the price producers will charge': This refers to supply-side behavior, but the table does not provide data on supply or producer behavior.
- 'How supply affects the number of goods consumers will buy': Again, this refers to supply, not the relationship between price and consumer demand.
- 'How price affects how many goods consumers will buy': This directly describes the observed relationship: as the price (the independent variable) changes, the quantity demanded (the dependent variable) changes accordingly.
- 'How price affects how many goods producers will provide': This relates to the Law of Supply, which deals with producer behavior, not consumer demand as shown in the table.
Comparing these options to our analysis in Step 1, the table explicitly maps out how price influences the quantity demanded by consumers, which is the core concept of the Law of Demand.
- Conclusion
Based on the inverse relationship observed, the table demonstrates how changes in the price of a good directly influence the quantity that consumers are willing to purchase. This confirms that the correct description is 'how price affects how many goods consumers will buy'.
Examples
This table represents a classic demand schedule. In real-life scenarios, businesses use these schedules to conduct market research and set prices. For example, if a store owner wants to maximize their revenue, they can use this data to calculate the total revenue at each price point (Price \(\times\) Quantity) and determine which price level generates the most sales. Understanding this relationship helps companies predict how consumer behavior changes when they decide to run a sale or increase the price of their products.