Question

Which explains the connection between the law of demand and excess demand?

Answer 1

The connection between the law of demand and excess demand is that law of demand states that it is stated that if the factors remain equal, the higher the price, the lesser consumer is going to be demanding for that good, whereas the excess demand is the exact opposite; the lower the price, the more demands you'll get.

Answer 2

Correct answer choice is :

A) The law states that price decreases lead to greater demand and limited supply, which occur during excess demand.

Explanation:

The law of demand states that conditional on all else being equal, as the price of a good increase, quantity demanded decreases; conversely, as the price of a good decrease, quantity demanded increases. The excess stock makes the price to fall and quantity demanded to rise.  A reduction in supply will make an increase in the balance price and a decrease in the equilibrium amount of a good. Excess demand makes the price to rise and quantity demanded to decrease.