Which of the following best describes the law of demand?

• A. As the price of a good decreases, the supply of the good decreases.
• B. As consumer income increases, the quantity demanded of all goods decreases.
• C. As the price of a good increases, the quantity demanded increases, all else equal.
• D. As the price of a good increases, the quantity demanded decreases, all else equal.

Answer: (D)

Verified step by step guidance

1. Understand that the law of demand describes the relationship between the price of a good and the quantity demanded by consumers.
2. Recall that the law of demand states that, ceteris paribus (all else equal), when the price of a good increases, the quantity demanded decreases, and vice versa.
3. Identify that this relationship is inverse, meaning price and quantity demanded move in opposite directions.
4. Recognize that the other options either confuse demand with supply, relate to income effects rather than price effects, or incorrectly state the direction of the relationship.
5. Conclude that the correct description of the law of demand is: 'As the price of a good increases, the quantity demanded decreases, all else equal.'