Last year the price of corn was $3 a bushel and the quantity of corn demanded was 10 million bushels. This year the price of corn was $4.00 a bushel and the quantity demanded was 12 million
Bushels. Is this evidence that the law of demand does not apply to corn?
A) Yes, because there is a direct relationship between the price of corn and the quantity supplied.
B) Yes, because there is an inverse relationship between the price of corn and the quantity demanded.
C) No, because the other-things-equal assumption was violated over the two-year period.
D) No, because the evidence indicates that there is a shortage of corn.

Question

Quizplus · Accepted Answer

The law of demand states that, all else equal, as the price of a good increases, the quantity demanded decreases, and vice versa. The increase in quantity demanded despite a price increase suggests that other factors (not accounted for in the scenario) influenced demand, violating the ceteris paribus (other-things-equal) condition.

Last Year the Price of Corn Was $3 a Bushel