If we observe a decrease in the price of a good and a decrease in the amount of the good bought and sold, this could be explained by a(an):
A) increase in the supply of the good.
B) increase in the demand for the good.
C) decrease in the demand for the good.
D) decrease in the supply of the good.

Question

Quizplus · Accepted Answer

A decrease in the price would normally lead to an increase in the quantity of the good demanded, according to the Law of Demand. As the question states, however, the quantity of the good bought and sold has decreased. The decrease in both the price and the quantity points to a decrease in demand for the good.

If We Observe a Decrease in the Price of a Good