Which of the following is consistent with the law of demand?

• A. As the price of a good decreases, the quantity demanded remains unchanged.
• B. As the price of a good decreases, the quantity demanded decreases.
• C. As the price of a good increases, the quantity demanded increases.
• D. As the price of a good increases, the quantity demanded decreases.

Answer: (D)

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 increases, the quantity demanded decreases, and when the price decreases, the quantity demanded increases.
2. Analyze each option by comparing it to the law of demand: Check if the relationship between price and quantity demanded is inverse (opposite directions).
3. For the first option, 'As the price of a good decreases, the quantity demanded remains unchanged,' note that this implies no change in quantity demanded despite a price change, which contradicts the law of demand.
4. For the second option, 'As the price of a good decreases, the quantity demanded decreases,' observe that this suggests a direct relationship between price and quantity demanded, which is opposite to the law of demand.
5. For the third option, 'As the price of a good increases, the quantity demanded increases,' recognize that this also implies a direct relationship, contradicting the law of demand. Therefore, the correct statement consistent with the law of demand is: 'As the price of a good increases, the quantity demanded decreases.'