Multiple Choice
Which of the following statements is true about the impact of an increase in the price of lettuce?
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3. The Market Forces of Supply and Demand
The Demand Curve
Multiple Choice
According to the law of demand, which of the following statements is true?
A
The demand curve is typically upward sloping.
B
As the price of a good increases, the quantity demanded increases, ceteris paribus.
C
The law of demand does not apply when all other factors are held constant.
D
As the price of a good increases, the quantity demanded decreases, ceteris paribus.
Verified step by step guidance1
Understand the law of demand: It states that, ceteris paribus (all other factors held constant), when the price of a good increases, the quantity demanded of that good decreases, and vice versa.
Analyze the shape of the demand curve: Since quantity demanded decreases as price increases, the demand curve is typically downward sloping, not upward sloping.
Evaluate the given statements one by one: The statement 'The demand curve is typically upward sloping' contradicts the law of demand and is therefore false.
Check the statement 'As the price of a good increases, the quantity demanded increases, ceteris paribus': This is the opposite of the law of demand and is false.
Confirm the correct statement: 'As the price of a good increases, the quantity demanded decreases, ceteris paribus' aligns perfectly with the law of demand and is true.
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