Which of the following statements best describes the relationship shown by a typical downward-sloping demand curve for a good?

• A. As the price of the good decreases, the quantity demanded increases.
• B. As the price of the good decreases, the quantity demanded decreases.
• C. There is no relationship between price and quantity demanded.
• D. As the price of the good increases, the quantity demanded increases.

Answer: (A)

Verified step by step guidance

1. Understand the law of demand, which states that, ceteris paribus (all else equal), there is an inverse relationship between the price of a good and the quantity demanded.
2. Recognize that a downward-sloping demand curve graphically represents this inverse relationship, where the vertical axis shows price (\(P\)) and the horizontal axis shows quantity demanded (\(Q_d\)).
3. Interpret the slope of the demand curve: as price (\(P\)) decreases, the quantity demanded (\(Q_d\)) moves to a higher value along the curve, indicating an increase in quantity demanded.
4. Eliminate options that contradict the law of demand, such as quantity demanded decreasing when price decreases or quantity demanded increasing when price increases.
5. Conclude that the correct description is: 'As the price of the good decreases, the quantity demanded increases,' which aligns with the typical downward-sloping demand curve.