During the mid-2000s, the average price of a used car fell by nearly $500 and the quantity sold nation-wide decreased by several thousands each year. This set of results is a contradiction of the law of demand.

Question

Quizplus · Accepted Answer

The law of demand states that, all else being equal, as the price of a good decreases, the quantity demanded increases. However, if other factors such as consumer preferences, income, or economic conditions change, the quantity demanded can decrease even if prices fall.

During the Mid-2000s, the Average Price of a Used Car