Multiple Choice
For a perfectly competitive firm like Youyeet, the demand curve it faces is identical to which of its other curves?
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3. The Market Forces of Supply and Demand
The Demand Curve
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which statement accurately describes the relationship between price and quantity demanded on the demand curve?
A
As price decreases, quantity demanded remains constant.
B
As price increases, quantity demanded increases.
C
As price increases, quantity demanded decreases.
D
Price and quantity demanded are unrelated.
Verified step by step guidance1
Understand the law of demand, which states that, ceteris paribus (all else equal), there is an inverse relationship between price and quantity demanded.
Recognize that this means when the price of a good increases, the quantity demanded decreases, and when the price decreases, the quantity demanded increases.
Identify that the demand curve graphically represents this relationship, typically sloping downward from left to right.
Evaluate each statement by comparing it to the law of demand: for example, 'As price increases, quantity demanded increases' contradicts the law of demand.
Conclude that the statement 'As price increases, quantity demanded decreases' accurately describes the relationship shown by the demand curve.
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