According to the law of demand, what is the relationship between price and quantity demanded?

• A. As price increases, quantity demanded increases
• B. As price decreases, quantity demanded decreases
• C. As price decreases, quantity demanded increases
• D. Price does not affect quantity demanded

Answer: (C)

The law of demand states that there is an inverse relationship between price and quantity demanded. This means that when the price of a good or service decreases, consumers are more likely to purchase more of that good or service, leading to an increase in quantity demanded. Conversely, when the price rises, the quantity demanded typically falls because fewer consumers are willing or able to buy the higher-priced items.

In this case, the correct answer reflects this fundamental principle by stating that as price decreases, quantity demanded increases. This behavior can be attributed to a few factors, such as consumer preference for lower prices and the overall increase in purchasing power when prices drop, allowing people to afford more goods. This is a core concept in the study of economics that helps explain consumer behavior in response to price changes.