Which of the following examples demonstrates the law of demand?

• A. When the price of bread increases, consumers buy more bread.
• B. When the price of milk remains the same, consumers buy less milk.
• C. When the price of tea decreases, consumers buy less tea.
• D. When the price of coffee increases, consumers buy less coffee.

Answer: (D)

Verified step by step guidance

1. Recall 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, and when the price decreases, the quantity demanded increases.
2. Analyze each example by checking if the quantity demanded moves in the opposite direction to the price change, as required by the law of demand.
3. For the first example: 'When the price of bread increases, consumers buy more bread' — this contradicts the law of demand because quantity demanded should decrease when price rises.
4. For the second example: 'When the price of milk remains the same, consumers buy less milk' — since the price is constant, the law of demand does not apply here because it relates price changes to quantity demanded changes.
5. For the third example: 'When the price of tea decreases, consumers buy less tea' — this also contradicts the law of demand because quantity demanded should increase when price falls; therefore, the correct example is the one where 'When the price of coffee increases, consumers buy less coffee,' which aligns with the law of demand.