According to the law of demand, what happens to the quantity demanded of a good when its price rises, holding all other factors constant?

• A. Quantity demanded decreases.
• B. Demand increases (the demand curve shifts right).
• C. Quantity demanded remains unchanged.
• D. Quantity demanded increases.

Answer: (A)

Verified step by step guidance

1. Recall the law of demand, which states that, ceteris paribus (holding all other factors constant), there is an inverse relationship between the price of a good and the quantity demanded.
2. Understand that when the price of a good rises, consumers typically buy less of that good because it becomes more expensive relative to other goods or their budget constraints tighten.
3. Recognize that this change is a movement along the demand curve, not a shift of the demand curve itself, since other factors affecting demand are held constant.
4. Therefore, an increase in price leads to a decrease in the quantity demanded, illustrating the downward slope of the demand curve.
5. Summarize that the correct interpretation of the law of demand is: when the price rises, the quantity demanded decreases, holding all else constant.