ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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increases
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decreases
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stays the same
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None of the above
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Detailed explanation-1: -If the price decreases, quantity demanded increases. This is the Law of Demand. On a graph, an inverse relationship is represented by a downward sloping line from left to right.
Detailed explanation-2: -Demand curves always slope downward, because consumers are willing to buy more of any product when it is priced lower than usual. As the price increases for beef, for example, fewer sales occur.
Detailed explanation-3: -If the price of beef increases, people will shift to consuming chicken and this will cause an increase in the demand for chicken. In the market for chicken, the demand curve for chicken will shift to the right and as a result of the increase in demand, the equilibrium price and quantity of chicken will increase.
Detailed explanation-4: -What will happen to the demand or quantity demanded of Spam if the income of the people buying Spam decreases? Answer: The demand curve for Spam will shift to the right (increase). By definition an inferior good is one we buy more of if our income goes down.