Question

Which statement is consistent with the law of demand? A reduction in market price will lead to an increase in quantity demanded.An increase in market price will lead to an increase in quantity demanded.At a zero price, quantity demanded will be equal to zero.A reduction in market price will lead to a decrease in quantity demanded.

Answer 1

The statement consistent with the law of demand is that a reduction in market price will lead to an increase in quantity demanded, due to the inverse relationship between price and quantity demanded.

Step-by-step explanation:

The statement consistent with the law of demand is 'A reduction in market price will lead to an increase in quantity demanded.'

According to the law of demand, there is an inverse relationship between the price of a good or service and the quantity demanded. This economic principle implies that as prices fall, consumers are more likely to purchase higher quantities of that good, as it becomes more affordable in comparison to other goods. Conversely, as prices rise, the quantity demanded tends to decrease because consumers will begin to forgo the higher-priced item in favor of spending their limited resources on other goods.

Therefore, at a lower market price, the opportunity cost of buying the good decreases, leading to an increase in quantity demanded.

Answer 2

The correct answer is: A reduction in market price will lead to an increase in quantity demanded.

Step-by-step explanation:

The law of demand states that other things being constant, a reduction in the market price will lead to an increase in the quantity demanded of a commodity. On the other hand, an increase in the price will cause a decline in the quantity demanded.

The other factors that are assumed to be constant are the income of the consumer, population, price of other goods, preferences, and tastes of the consumer.