Which of these statements best represents the law of demand?

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

Answer: (A)

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 rises, the quantity demanded of that good falls, and vice versa.
2. Identify the key relationship in the statements: focus on how price changes affect quantity demanded, not supply or income effects.
3. Evaluate each statement by checking if it aligns with the inverse relationship between price and quantity demanded described by the law of demand.
4. Recognize that the correct statement must show that an increase in price leads to a decrease in quantity demanded, holding other factors constant.
5. Conclude that the statement 'As the price of a good increases, the quantity demanded decreases, all else equal' best represents the law of demand.