Question

Which explains the connection between the law of demand and excess demand?

The law states that decreases in price leads to greater quantity demanded and limited supply, which occurs during
excess demand.
O The law states that increases in price increases leads to greater quantity demanded and limited supply, which occurs
during excess demand.
The law states that decreases in price leads to greater supply and equilibrium, which occurs during excess demand.
O The law states that increases in price leads to greater supply and equilibrium, which occurs during excess demand.

Answer 1

A

or

The law states that decreases in price leads to greater quantity demanded and limited supply, which occurs during excess demand.

Step-by-step explanation:

Answer 2

The law states that decreases in price leads to greater quantity demanded and limited supply, which occurs during excess demand.

Step-by-step explanation:

The law of demand talks of an inverse relationship between the price and demand for a commodity. As per the law, an increase in price leads to a decrease in demand. High prices make a product unaffordable to many consumers forcing them to seek alternatives. A price reduction encourages more consumers to buy the product, an increase in demand.

Limited supply is when sellers are unable to match the buyer's demand for a product. It is a scenario where demand exceeds supply. In limited supply, there will be excess demand in the market, which may push prices higher.