Why does the quantity demanded decrease when the price of a good increases?
A)People choose to reduce consumption of the item.
B)People "drop out" of the market for the item.
C)People find substitutes for the item.
D)All of these responses are correct.

Question

Quizplus · Accepted Answer

All three responses are correct. When the price of a good increases, people may choose to consume less of the item, drop out of the market altogether, or find substitutes for the item that are more affordable. Ultimately, the demand for the item decreases as the price increases.

Why Does the Quantity Demanded Decrease When the Price of a Good