Question

Which of the following statement is CORRECT about the Law of Demand with regard to subject of Economics?

1. a) The law of demand is a fundamental principle of economics that states that at a higher price consumer will demand a lower quantity of a good.
2. b) Demand is derived from the law of diminishing marginal utility it is based on the fact that consumers use economic goods to satisfy their most urgent needs first.
3. c) The shape and magnitude of demand shifts in response to changes in price.

• A. ii, iii
• B. None of these
• C. i, ii
• D. i only

Answer 1

Answer:

C. i, ii

• The law of demand states that as price increases, quantity demanded decreases, and vice versa.

• This is reflected in option a.

• Option b correctly identifies the relationship between the law of demand and diminishing marginal utility.

• Option c is incorrect as the shape and magnitude of the demand curve is not entirely dependent on price changes; there are other factors that affect demand.

• The Law of Demand is a fundamental principle in economics that states there is an inverse relationship between the price of a good or service and the quantity demanded by consumers, assuming all other factors remain constant (ceteris paribus).