15
QuizMultiple Choice

The Law of Supply and Demand — Quiz

Question 15 • Personal Finance and Economics

Which statement best explains the law of demand?

Answer
A
The quantity demanded by producers increases as prices rise, then decreases as prices fall.
B
The quantity demanded by consumers increases as prices rise, then decreases as prices fall.
C
The quantity demanded by consumers decreases as prices rise, then increases as prices fall.
D
The quantity demanded by producers decreases as prices rise, then increases as prices fall.

Explanation

The law of demand describes how consumers respond to a price change: when a good’s price rises, the quantity consumers demand generally falls; when the price falls, the quantity demanded generally rises. This inverse relationship is stated in choice C. Choices A and D describe producers, while B reverses the direction of the relationship.

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