Which of the following best describes a basic principle of the law of demand?

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

Answer: (A)

Verified step by step guidance

1. Understand that the law of demand describes the relationship between the price of a good and the quantity demanded by consumers.
2. Recall that the law of demand states that, all else equal, when the price of a good increases, the quantity demanded decreases, and when the price decreases, the quantity demanded increases.
3. Recognize that this inverse relationship is due to consumers' tendency to buy less of a good when it becomes more expensive and more when it becomes cheaper.
4. Evaluate each option by comparing it to the law of demand: the correct principle must reflect this inverse relationship between price and quantity demanded.
5. Identify the option that states 'As the price of a good increases, the quantity demanded decreases' as the best description of the law of demand.