Which statement best illustrates the law of demand?

• A. As consumer income increases, the demand for coffee decreases.
• B. As the price of coffee increases, consumers buy more coffee.
• C. As the price of coffee decreases, the supply of coffee increases.
• D. As the price of coffee increases, consumers buy less coffee.

Answer: (D)

Verified step by step guidance

1. Understand the law of demand: It states that, ceteris paribus (all else equal), when the price of a good increases, the quantity demanded of that good decreases, and vice versa.
2. Identify the key variables involved: The law of demand focuses on the relationship between the price of a good and the quantity demanded by consumers.
3. Analyze each statement to see if it reflects this inverse relationship between price and quantity demanded:
4. - The first statement relates demand to consumer income, which is about income effect, not the law of demand.
5. - The second statement claims that as price increases, consumers buy more, which contradicts the law of demand.
6. - The third statement talks about supply, which is a different concept from demand.
7. - The last statement correctly states that as the price of coffee increases, consumers buy less coffee, illustrating the law of demand.