Question

The law of demand states that, other things equal, when the price of a good

Answer 1

Answer:

D

Explanation:

The demand law is a very fundamental concept in the world of economics. It was formulated to explain allocation of resources in markets and determination if the price of goods and services offered in daily transactions, along with the law of supply. In other words, the law of demand simply says the higher the price of a commodity or service is, the lower quantity is demanded of it. This is as a result of diminishing marginal utility which in essence means that consumers utilize the initial units of a commodity purchased by them to attend to the needs that are placed highest on their scale of preference, then use each extra unit of the commodity to serve consecutively lower valued ends.

Answer 2

Answer:

b) When the price of a good falls, the quantity demanded of the good rises.

Explanation:

A demand curve is a graphical depiction for consumer response to various price levels. Like every other graph there are two stationed variables, horizontal axis (x-axis) and vertical axis (y-axis). Quantities demanded are plotted on x-axis whereas the prices are plotted on the y-axis. So if the slope curves downwards to the right it will construe that the price of the product is high, resulting in the reduction of demand.  

However, the law of demand states that other things equal, when the price of a good falls, the quantity demanded of the good rises. For instance, take avocados as an example. They are not considered essential enough for daily intake and are bought occasionally. But if the local grocery store lower the price for avocados up to $0.69 each, consumers would find it attractive and would likely pick some for dinner. But what happens when the prices go high is that if the same avocado was to be sold at $2 each, the response would be different. Consumers might not even pick one unless it’s a requirement for some special recipe.