Which of the following illustrates the law of demand?

• A. As the price of a good decreases, the quantity demanded remains unchanged.
• B. As the price of a good increases, the quantity demanded decreases.
• C. As the price of a good increases, the quantity demanded increases.
• D. As the price of a good decreases, the quantity supplied decreases.

Answer: (B)

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 decreases, and when the price decreases, the quantity demanded increases.
2. Analyze each option by comparing it to the law of demand definition:
3. Option 1: 'As the price of a good decreases, the quantity demanded remains unchanged.' This contradicts the law of demand because quantity demanded should increase when price decreases.
4. Option 2: 'As the price of a good increases, the quantity demanded decreases.' This matches the law of demand exactly.
5. Option 3 and 4 involve either quantity demanded increasing with price or quantity supplied decreasing with price, which do not illustrate the law of demand.