Which of the following statements best represents the law of demand?

• A. As the price of a good increases, the quantity demanded decreases, all else equal.
• B. As consumer income increases, the quantity demanded of all goods decreases.
• C. As the price of a good increases, the quantity demanded increases, all else equal.
• D. As the price of a good decreases, the supply of the good 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, holding all other factors constant (ceteris paribus).
2. Recall that the law of demand states that when the price of a good increases, the quantity demanded of that good decreases, and vice versa.
3. Analyze each statement to see if it matches this inverse relationship between price and quantity demanded:
4. - The first statement says: 'As the price of a good increases, the quantity demanded decreases, all else equal.' This matches the law of demand.
5. - The other statements either describe income effects, supply changes, or a direct relationship between price and quantity demanded, which do not align with the law of demand.