ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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supply curves are upward sloping
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the higher price means that real incomes have risen
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consumers will substitute other products for the one whose price has risen
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consumers substitute relatively high-priced for relatively low-priced products
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Detailed explanation-1: -Consumers will substitute other products for the one whose price has risen. As per the demand curve, the quantity demanded for a product is inversely related to its price. Thus, an increase in the price of a product reduces its quantity demanded and a decrease in the price of a product increases its quantity demanded.
Detailed explanation-2: -The higher the price, the more suppliers are likely to produce. Conversely, buyers tend to purchase more of a product the lower its price. The equation that spells out the quantities consumers are willing to buy at each price is called the demand curve.
Detailed explanation-3: -Economists say the law of demand demonstrates that ceteris paribus, more goods tend to be purchased at lower prices. Or that, if demand for any given product exceeds the product’s supply, ceteris paribus, prices will likely rise. In this situation, the price of an item is the only variable that should change.
Detailed explanation-4: -Because buyers have finite resources, their spending on a given product or commodity is limited as well, so higher prices reduce the quantity demanded. Conversely, demand rises as the product becomes more affordable. As a result, demand curves slope downward from left to right, as in the chart below.