One major reason for the law of demand is that
A) one price changing requires at least one other price to change in the opposite direction.
B) people substitute relatively lower-priced goods for relatively higher-priced goods.
C) a higher price never reduces quantity demanded by enough to lower total revenue.
D) people are willing to produce more units at a higher price.

Question

Quizplus · Accepted Answer

The law of demand states that as the price of a good increases, the quantity demanded decreases, ceteris paribus. One major reason for this is that people substitute relatively lower-priced goods for relatively higher-priced goods, which means they will demand less of a good as its price increases and more of a good as its price decreases. This substitution effect is a key driver of the law of demand.

One Major Reason for the Law of Demand Is That