Which of the following is consistent with the law of demand?
A) People substitute higher-priced goods for higher-quality goods.
B) People substitute some higher-priced goods for other higher-priced goods.
C) People substitute lower-priced goods for higher-priced goods.
D) People substitute some lower-priced goods for other lower-priced goods.

Question

Quizplus · Accepted Answer

The law of demand states that as the price of a good increases, the quantity demanded for that good will decrease. Therefore, people will typically substitute lower-priced goods for higher-priced goods in order to save money. Option A is not consistent with the law of demand because it suggests people are willing to pay more for higher-quality goods, which goes against the idea that demand decreases as price increases. Option B and D refer to substitution between goods of similar prices and do not address how price affects demand, so they are also not consistent with the law of demand.

Which of the Following Is Consistent with the Law of Demand