Explain the law of demand. What does it imply about the shape of the demand curve?
What will be an ideal response?
The law of demand describes the inverse relationship between price and quantity demanded. All else equal, as the price of a good rises, the quantity demanded of the good will fall. As the price of a good falls, the quantity demanded rises. This implies that the demand curve will be downward sloping.
Economics
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In the above figure, the economy is initially at point B. If the Fed decreases the quantity of money, there is
A) a movement to point C. B) a movement to point A. C) a shift to AD2. D) a shift to AD1.
Economics
Which of the following events will cause the interest rate to increase?
A) an open market sale of bonds B) an increase in the reserve deposit ratio (i.e., ?) C) an increase in income D) all of the above
Economics