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

Question

Quizplus · Accepted Answer

The law of demand states that, ceteris paribus, when the price of a good falls, the quantity demanded will increase. However, the scenario described involves a decrease in both price and quantity sold, which could be influenced by factors other than price, such as changes in consumer preferences, income, or the availability of substitutes, and does not directly contradict the law of demand.

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