Question

20) A decrease in the price of a particular product will result in A) a decrease in the demand for that product. B) a shift in the production possibilities frontier. C) an increase in the quantity demanded of that product. D) an increase in the quantity supplied of that product.

Answer 1

The correct answer is - C) an increase in the quantity demanded of that product.

When a prize of a product goes down and the quality of the same remains the same, people tend to shift towards that product and start to buy that product, while in meantime leaving the products that they were buying before because they have a bigger prize. This also contributes to people buying more in quantity, and this is in case the prize of the product gets back as it was before. Since more people start to buy the product, and also buy it larger quantity, there's an increase in the demand for the particular product.