Multiple Choice
Which of the following statements accurately characterizes the demand curve?
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3. The Market Forces of Supply and Demand
The Demand Curve
Multiple Choice
The law of demand states that, other things equal, when the price of a good increases:
A
the quantity demanded decreases
B
the quantity demanded increases
C
the demand curve becomes steeper
D
the demand curve shifts to the right
Verified step by step guidance1
Understand the law of demand: It states that, ceteris paribus (all other things being equal), there is an inverse relationship between the price of a good and the quantity demanded.
Identify what happens when the price of a good increases: According to the law of demand, as price goes up, consumers will generally buy less of that good.
Distinguish between a movement along the demand curve and a shift of the demand curve: A change in price causes a movement along the demand curve (change in quantity demanded), not a shift of the curve itself.
Recognize that the demand curve becoming steeper is unrelated to a price change; it relates to changes in price elasticity or other factors affecting demand responsiveness.
Conclude that the correct interpretation is that when the price increases, the quantity demanded decreases, reflecting a movement upward along the demand curve.
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