Suppose all prices increase by 10 percent in the year while the total sales of HDTVs remain constant. This is
A)a violation of the law of demand since fewer HDTVs should be purchased at a higher price.
B)a violation of the law of demand since more HDTVs should have been purchased with higher incomes.
C)not a violation of the law of demand since the relative price of HDTVs did not change.
D)not a violation of the law of demand since the law of demand does not apply to expensive goods like HDTVs.

Question

Quizplus · Accepted Answer

The law of demand states that as the price of a good increases, the quantity demanded will decrease. However, in this scenario, even though the prices of HDTVs have increased by 10%, the total sales remain constant. This implies that the relative price of HDTVs has not changed, and consumers are still willing to buy the same quantity of HDTVs at the higher price. Therefore, this is not a violation of the law of demand.

Suppose All Prices Increase by 10 Percent in the Year