Multiple Choice
In the market for bags of potato chips, which of the following would cause the demand curve to shift to the right?
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3. The Market Forces of Supply and Demand
The Demand Curve
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Which statement best explains the law of demand?
A
As consumer income increases, the demand for all goods decreases.
B
As the price of a good decreases, the supply of the good decreases.
C
As the price of a good increases, the quantity demanded increases, all else held constant.
D
As the price of a good increases, the quantity demanded decreases, all else held constant.
Verified step by step guidance1
Understand that the law of demand describes the relationship between the price of a good and the quantity demanded by consumers.
Recall that the law of demand states: "All else held constant, as the price of a good increases, the quantity demanded decreases," and conversely, as the price decreases, the quantity demanded increases.
Identify that this relationship is inverse, meaning price and quantity demanded move in opposite directions.
Recognize that the other statements either confuse demand with supply or incorrectly describe the relationship between price and quantity demanded.
Conclude that the correct explanation of the law of demand is: "As the price of a good increases, the quantity demanded decreases, all else held constant."
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