Question

Which statements are true according to the law of demand? An increase in supply leads to an increase in demand. A decrease in supply leads to a decrease in demand. An increase in price leads to a decrease in quantity demanded. A decrease in price leads to an increase in quantity demanded. An increase in price leads to an increase in demand.

Answer 1

The correct statements are:

An increase in price leads to a decrease in quantity demanded

and

A decrease in price leads to an increase in quantity demanded

According to the laws of demand and supply, if the price of any product/service is increased there would naturally be less demand for such a product.

As a natural human response, we avoid products that get expensive and opt for cheaper options.

Also, if the price of a product/service decreases, there would be more demand for such a product as more people will be able to buy it.