Asked by Takafumi Yoshida on Jul 27, 2024
Verified
The law of demand states that as the price of a good rises,_____.
A) buyers purchase more of the good,because they expect prices to be even higher in the future
B) buyers purchase less of the good,because they expect prices to fall in the future
C) buyers purchase less of the good,because their real income decreases with an increase in price
D) buyers purchase more of the good,because the price of a substitute has risen
E) buyers purchase more of the good,because the higher price reflects an improvement in product quality
Real Income
Income measured in terms of the goods and services it can buy; real income changes when the price changes.
Law of Demand
A principle stating that, all else being equal, as the price of a good or service decreases, consumer demand for it will increase, and vice versa.
Price
The amount of money required to purchase a good or service, determined by various market and economic factors.
- Gain insight into the basic theory of the law of demand and understand its implications for the linkage between price and quantity demanded.
Verified Answer
JM
joanna martinezJul 31, 2024
Final Answer :
C
Explanation :
The law of demand indicates that as the price of a good increases, consumers will buy less of it because their purchasing power (or real income) decreases, making the good more expensive relative to their budget.
Learning Objectives
- Gain insight into the basic theory of the law of demand and understand its implications for the linkage between price and quantity demanded.