Question

Which statement is consistent with the law of demand?

1) A reduction in market price will lead to a decrease in quantity demanded.
2) At a zero price, quantity demanded will be equal to zero.
3) A reduction in market price will lead to an increase in quantity demanded.
4) An increase in market price will lead to an increase in quantity demanded.

Answer 1

Statement 3) 'A reduction in market price will lead to an increase in quantity demanded' is consistent with the law of demand, which states that there is an inverse relationship between price and quantity demanded in the market.

Step-by-step explanation:

The law of demand is a fundamental principle in economics that describes the relationship between the price of a good or service and the quantity demanded by consumers. According to the law of demand, if all other factors remain equal, an increase in the price of a good will lead to a decrease in the quantity demanded. Conversely, a decrease in the price of a good will result in an increase in the quantity demanded.

Therefore, statement 3) "A reduction in market price will lead to an increase in quantity demanded" is the option that is consistent with the law of demand. It reflects the inverse relationship between price and quantity demanded that the law describes.