Which statement accurately describes the relationship between price and quantity demanded?

A. When prices increase, quantity demanded decreases.
B. When prices increase, quantity demanded stays the same.
C. When prices decrease, quantity demanded decreases.
D. When prices decrease, quantity demanded stays the same.



Answer :

Final answer:

The law of demand states that price and quantity demanded are negatively related; when prices increase, quantity demanded decreases, and vice versa.


Explanation:

The relationship between price and quantity demanded is described by the law of demand which states that they are negatively related. In other words, as the price of a product increases, the quantity demanded decreases, and vice versa. This holds true for most goods and services.

For example, if the price of a popular toy increases during the holiday season, the quantity demanded by consumers would typically decrease due to the higher cost. Conversely, when a store offers a discount on a product, the quantity demanded tends to increase as more consumers are willing to purchase at a lower price.

Understanding this fundamental economic principle helps predict consumer behavior and market trends, guiding businesses in setting prices and making production decisions.


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