When quantity demanded decreases in response to a change in price, which of the following has occurred?

• A. The price has decreased, causing a movement down along the demand curve.
• B. The demand curve has shifted to the left.
• C. The demand curve has shifted to the right.
• D. The price has increased, causing a movement up along the demand curve.

Answer: (D)

Verified step by step guidance

1. Understand the difference between a movement along the demand curve and a shift of the demand curve. A movement along the demand curve occurs when the price of the good changes, affecting the quantity demanded, while a shift of the demand curve happens when factors other than price change, altering demand at every price level.
2. Recall the law of demand: when the price of a good increases, the quantity demanded decreases, resulting in a movement up along the demand curve; conversely, when the price decreases, the quantity demanded increases, causing a movement down along the demand curve.
3. Analyze the problem statement: quantity demanded decreases in response to a change in price. This implies that the price must have increased, leading to a movement up along the demand curve rather than a shift of the demand curve.
4. Eliminate options related to shifts of the demand curve (left or right) because the problem specifies a change in quantity demanded due to price, not a change in demand itself caused by other factors.
5. Conclude that the correct interpretation is that the price has increased, causing a movement up along the demand curve, which aligns with the law of demand.