Question

If the price of ice cream rose to $30 per gallon, consumers would purchase fewer gallons of ice cream than if the price were $4 per gallon. If the price of chocolate sauce fell to $0.50 per can, consumers would purchase more chocolate sauce than if the price were $5 per can. These relationships illustrate the

1. law of supply.
2. law of demand.
3. difference between normal and inferior goods.
4. difference between substitute and complement goods.

Answer 1

2. LAW OF DEMAND

Step-by-step explanation:

LAW OF DEMAND states that there is inverse relationship between price & quantity demanded. Quantity demanded is more at lower prices, quantity demanded is less at higher prices. The demand curve - graphically representing price demand relationship, is downward sloping because of Law of Demand.

In the given cases : Ice cream price rise from $4 to $30 decreases quantity demanded. Chocolate sauce price fall from $5 to $0.5 increases quantity demanded. So, the above examples of Ice Cream & Chocolate Sauce illustrate the case of 'Law of Demand'