The fact that price and quantity demanded are related negatively illustrates the

Question

BlackTom AI · Accepted Answer

Law of demand: price and quantity demanded are inversely related — the demand curve slopes downward.

1) Relevant knowledge points and concepts
- Law of demand: all else equal, when the price of a good rises, quantity demanded falls; when price falls, quantity demanded rises.
- Demand curve: graphical representation showing a negative (downward) slope.
- Reasons: substitution effect (consumers switch to relatively cheaper alternatives when price rises) and income effect (a price rise reduces real purchasing power, lowering quantity demanded).
- Exceptions (rare): Giffen or Veblen goods, but these do not nullify the general law.

2) Step-by-step reasoning
- Start with two price–quantity observations for the same good, holding other factors constant.
- If price increases and observed quantity demanded decreases, that is the negative relationship described by the law of demand.
- This is the defining characteristic of the law of demand, not of supply or any other nonstandard law.

3) Example calculation with intermediate steps
- Suppose at P = $2, Qd = 100 units; at P = $4, Qd = 60 units.
- Change in quantity: ΔQ = 60 − 100 = −40.
- Change in price: ΔP = 4 − 2 = 2.
- Slope (ΔQ/ΔP) = −40 / 2 = −20 (negative), showing an inverse relationship between P and Qd.

4) Why the correct answer is correct
- The negative relationship (price up → quantity demanded down) is the textbook statement of the law of demand and is represented by a downward-sloping demand curve.

5) Why the other options are incorrect
- a. law of supply: states a positive relationship (price up → quantity supplied up); opposite of the statement.
- c. law of quantity demand: not a standard economic term; redundant/misnamed.
- d. law of quantity supplied: also not a standard term; the correct standard is "law of supply."

6) Conclusion
The negative relationship between price and quantity demanded corresponds to the law of demand, so the correct choice is b. law of demand. This matches the provided answer.

The fact that price and quantity demanded are related negatively illustrates theSingle choice

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