Why does the quantity of a good demanded decrease when its price increases?
A) Complements become relatively cheaper when the price of a good increases.
B) Consumer preferences change when the price of a good changes.
C) The nominal income of consumers falls when the price of a good increases.
D) Substitutes become relatively cheaper when the price of a good increases.

Question

Quizplus · Accepted Answer

When the price of a good increases, consumers tend to substitute that good with similar goods that are relatively cheaper, resulting in a decrease in the quantity of the previously demanded good. This happens because substitutes become relatively cheaper when the price of a good increases.

Why Does the Quantity of a Good Demanded Decrease When