Exams › SSC CGL (Prelims) › General

Which of the following statements accurately describes the law of demand in microeconomics?

1. As price increases, demand increases.
2. As price decreases, demand decreases.
3. As price increases, demand decreases, ceteris paribus.
4. Price has no effect on demand.

Correct answer: As price increases, demand decreases, ceteris paribus.

Solution

The law of demand states that, other things remaining constant, quantity demanded falls when price rises and rises when price falls. This inverse relationship is the core idea behind the demand curve.

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