The figure given below represents the PPC in two nations

Question

The figure given below represents the PPC in two nations - Germany and Korea, producing only two goods, cars and food.Figure 2.4
 
-According to the law of demand, if the price of movie rentals decreases, ceteris paribus,:
A)the demand for movie rentals would increase. 
B)the quantity demanded of movie rentals would decrease. 
C)the quantity demanded of movie rentals would increase. 
D)the demand for movie rentals would decrease. 
E)the quantity demanded of movie rentals would not change.

Quizplus · Accepted Answer

According to the law of demand, there is an inverse relationship between price and quantity demanded. So, if the price of movie rentals decreases, the quantity demanded of movie rentals would increase, ceteris paribus. This is because consumers can now afford to buy more of the same movie rentals at a lower price. However, the demand for movie rentals could remain the same or change depending on other factors such as consumer preferences, advertising, and availability of substitutes.