Question

A model of demand predicts that a rise in price will cause a decrease in the quantity of a good consumers want to buy anda in price will cause an increase in the quantity of a good consumers want to buy. In this model: decrease a.the cause is the change in the price and the effect is a change in the quantity of the good consumers want to purchase. b.the cause is the change in the price and the effect is a change in the quality of the good consumers want to purchase. c.the cause is the change in the product quality and the effect is a change in the quantity of the good consumers want to purchase d.the cause is the change in the quantity of the good consumers want to purchase and the effect is a change in the price

Answer 1

Answer:

Option (a) is correct.

Explanation:

According to the law of demand, there is an inverse relationship between the price of the product and the quantity demanded for that product. Hence, if there is an increase in the price of the good then as a result this will decrease the quantity demanded for the good and if there is a fall in the prices of the goods then as a result the quantity demanded for the goods increases.

Therefore, the change in the price level of the goods represents the cause and its effect is the change in the quantity demanded for the goods that a consumer want to purchase.