Sally and Eric are the only people in an economy.Sally buys 3 bottles of water when the price is $2 a bottle and 4 bottles of water when the price is $1 a bottle.Eric buys 10 bottles of water when the price is $0.50 a bottle and 5 bottles of water when the price is $1 a bottle.In the market for water,the quantity demanded
A)increases as the price rises.
B)is 4 bottles at a price of $1 a bottle.
C)increases as the price falls.
D)is 8 bottles at a price of $2 a bottle.
E)is 15 bottles at a price of $0.50 a bottle.

Question

Quizplus · Accepted Answer

From the information given, we can see that Sally buys more bottles of water when the price falls from $2 to $1, and Eric buys more bottles of water when the price falls from $1 to $0.50. This indicates that the quantity demanded increases as the price falls, making choice C the correct answer. Choices B and D are both specific values that do not reflect the overall trend in the quantities demanded at different prices. Choice A is incorrect because the inverse relationship between price and quantity demanded is established through the behavior of the individuals in the economy. Choice E is also too specific, as it reflects only the total quantity demanded at the lowest price point.

Sally and Eric Are the Only People in an Economy