The nature of demand indicates that as the price of a good increases:

• A. the quantity demanded decreases
• B. the quantity demanded increases
• C. the demand curve becomes vertical
• D. the demand curve shifts to the right

Answer: (A)

Verified step by step guidance

1. Understand the Law of Demand, which states that, ceteris paribus (all else equal), when the price of a good increases, the quantity demanded of that good decreases.
2. Recognize that the demand curve itself represents the relationship between price and quantity demanded, holding other factors constant. A movement along the demand curve occurs when price changes, affecting quantity demanded.
3. Note that an increase in price does not shift the demand curve; instead, it causes a movement upward along the existing demand curve, leading to a lower quantity demanded.
4. Identify that a shift in the demand curve (to the right or left) happens due to changes in non-price factors such as income, tastes, or prices of related goods, not due to a change in the good's own price.
5. Conclude that the correct interpretation is: as the price of a good increases, the quantity demanded decreases, reflecting a movement along the demand curve rather than a shift.