One reason why the quantity demanded of a good tends to fall as its price rises is that:
A)the increase in price shifts the supply curve upward.
B)the increase in price shifts the demand curve downward.
C)at higher prices, suppliers are willing to supply less.
D)people feel poorer and cut down on their use of the good.
E)demand has to fall to restore equilibrium after a price rise.

Question

Quizplus · Accepted Answer

The concept described is the income effect, which posits that as the price of a good increases, consumers feel effectively poorer because their purchasing power decreases, leading them to reduce their consumption of the good.

One Reason Why the Quantity Demanded of a Good Tends