Final answer:
A price increase from $30 to $40 generally results in a lower quantity demanded for that good, according to the law of demand. The demand curve represents this relationship, showing lower demand at higher prices, while a separate factor like income can shift the entire demand curve.
Step-by-step explanation:
When the price increases from $30 to $40, this typically leads to a decrease in the quantity demanded of that good, according to the law of demand. This principle states that, all else being equal, as the price of a product increases, the demand for that product decreases. For example, using automobile pricing in Figure 3.5, if the price of a car increases from $20,000 to $22,000, the quantity demanded goes down from 18 million to 17 million.
The effect of price changes on demand can be visually represented on a demand curve, where increased price levels will move along the curve to a lower quantity demanded. However, if income levels increase, this can shift the entire demand curve to the right, indicating an overall increase in demand at every price level. This is separate from simple price changes and is an example of a factor that can cause demand to increase or decrease.