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When the quantity demanded by consumers goes up, we can be sure that there has been a rise in demand. True or False

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Final answer:

It is false that an increase in the quantity demanded always indicates a rise in demand. A rise in quantity demanded is usually due to a price decrease, not necessarily a shift in demand. Demand increase implies a shift in the entire demand curve, due to factors other than price.

Step-by-step explanation:

The statement "When the quantity demanded by consumers goes up, we can be sure that there has been a rise in demand" is false. An increase in the quantity demanded is not the same as an increase in demand. The quantity demanded can rise because of a decrease in price, which is according to the law of demand, which states that there is an inverse relationship between price and quantity demanded - as price falls, quantity demanded rises, and vice versa, ceteris paribus (all other factors being equal). However, a rise in demand implies a shift of the entire demand curve to the right, where consumers would purchase more of the good at every price level, potentially due to changes in factors other than price such as consumer preferences, income, prices of related goods, etc.

As outlined in the Demand and Supply chapter, the basic model of demand and supply indicates that typically, higher prices lead to a lower quantity demanded, and lower prices lead to a higher quantity demanded. These effects are consistent until natural limits are reached - extremely high prices will eventually reduce the quantity demanded significantly, and vice versa. This is also explained by changes in consumer behavior as buyers find more value when prices are lower, even if the quality is not as high, until the point where information becomes widely known and market adjustments occur.

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