Suppose the demand curve for tofu passes through points a and b as shown on the graph. If the price of tofu decreases from the price at point a to the price at point b, what happens to the quantity demanded?

• A. The quantity demanded decreases.
• B. The quantity demanded remains unchanged.
• C. The effect on quantity demanded cannot be determined.
• D. The quantity demanded increases.

Answer: (D)

Verified step by step guidance

1. Understand that the demand curve shows the relationship between the price of a good and the quantity demanded, typically with price on the vertical axis and quantity on the horizontal axis.
2. Identify points a and b on the demand curve, noting their respective prices and quantities demanded. Since the problem states the price decreases from point a to point b, observe how the quantity demanded changes between these points.
3. Recall the law of demand, which states that, ceteris paribus, when the price of a good decreases, the quantity demanded increases.
4. Compare the quantities at points a and b: if the price at point b is lower than at point a, then the quantity demanded at point b should be higher than at point a.
5. Conclude that a decrease in price from point a to point b leads to an increase in quantity demanded, consistent with the downward-sloping demand curve.