Question

When the price of a good changes, what effects tend to create the law of demand?

Answer 1

theres no answer choices butttt there are 3effects that explain the law of demand.

Income effect - As the price of a good increases, people purchase less quantity because they are limited by the amount of income they earn. Since it's not allowed to change, they are forced to purchase less.

Substitution effect - As the price of a good increases people purchase less quantity because they will switch to a now "relatively" cheaper substitute. The price of the substitute isn't allowed to change, so people buy more of it and less of the original.

Law of D.M.R. - As you acquire more of a good, the value of each unit decreases. Because the value is decreasing, so is the amount you are willing to pay leading to an inverse relationship between price and quantity demanded.

sorry its a long answer i dont mean to be that one person