A downward-sloping demand curve illustrates which of the following economic principles?

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

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of a demand curve. A demand curve shows the relationship between the price of a good and the quantity demanded by consumers.
2. Step 2: Recognize that a downward-sloping demand curve means that as the price decreases, consumers are willing to buy more of the good, and as the price increases, they buy less.
3. Step 3: This relationship is known as the Law of Demand, which states that quantity demanded moves inversely with price, all else equal.
4. Step 4: Analyze each option in the problem to see which matches the Law of Demand: the correct principle is that as price decreases, quantity demanded increases.
5. Step 5: Conclude that the correct answer is: 'As the price of a good decreases, the quantity demanded increases.' because it aligns with the downward slope of the demand curve.