alleryThe law of demand states that, other things being equal, when the price of a good rises, the quantity demanded of the good will do which of the following?
AStay constant
BRise
CFall
DDouble exactly
Answer & Solution
Correct answer: C. Fall
1. The law of demand assumes ceteris paribus, other things being equal.
2. It states an inverse relationship between price and quantity demanded.
3. So when price rises, quantity demanded falls.
4. The correct answer is that it falls.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit I "Law of Demand and Elasticity of Demand", p.10_
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