At a price of $5, Sam buys 10 units of a product; when the price increases to $6, Sam buys 8 units. Which of the following is correct about Sam's behavior?
A) Sam's demand has decreased.
B) Sam's demand has increased.
C) Sam's quantity demanded has decreased, and his demand has not changed.
D) Sam's quantity demanded has increased, and his demand has increased.
E) Sam's demand has increased, and his quantity demanded has decreased.

Question

Quizplus · Accepted Answer

Sam's behavior shows that he is sensitive to changes in price, as he is buying less units when the price increases. However, this does not necessarily mean that his overall demand for the product has decreased. Demand refers to the whole range of prices and quantities that a consumer is willing and able to buy, whereas quantity demanded refers specifically to the amount that a consumer is willing and able to buy at a given price. In this case, Sam's quantity demanded has decreased as the price has increased, but his demand as a whole may not have changed.

At a Price of $5, Sam Buys 10 Units of a Product;