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Holding income, tastes, and every other market factor fixed, what does the law of demand say happens to quantity demanded when the price of a good rises?
AQuantity demanded almost always falls
BQuantity demanded almost always rises
CQuantity demanded stays exactly fixed
DQuantity supplied almost always falls
Answer & Solution
Correct answer: A. Quantity demanded almost always falls
1. The law of demand isolates the effect of price alone on quantity demanded, holding income, tastes, and other prices constant.
2. A higher price makes the good more costly to buyers, so they cut back on how much they buy.
3. Quantity demanded almost always falls when price rises, and rises when price falls.
4. Option D describes how sellers react to a price change, which is the law of supply, not the law of demand.
_Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 3 "Demand and Supply", section 3.1 | Demand, Supply, and Equilibrium in Markets for Goods and Services_
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