ExpertEasy1 markMultiple Choice
ACCA · Question 33 · Business & Technology
Section A
According to the basic law of demand in microeconomics, if the price of a normal good increases, what happens to the quantity demanded (ceteris paribus)?
Section A
According to the basic law of demand in microeconomics, if the price of a normal good increases, what happens to the quantity demanded (ceteris paribus)?
Answer options:
A.
It increases
B.
It decreases
C.
It remains unchanged
D.
It fluctuates randomly
How to approach this question
Remember the inverse relationship between price and demand for normal goods.
Full Answer
B.It decreases✓ Correct
The law of demand states that, all else being equal (ceteris paribus), as the price of a product increases, quantity demanded falls; likewise, as the price of a product decreases, quantity demanded increases.
Common mistakes
Confusing the law of demand with the law of supply.
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