The law of demand is derived under the assumption of
A) constant prices.
B) constant real incomes.
C) constant consumer tastes and preferences.
D) constant marginal utility.

Question

Quizplus · Accepted Answer

The law of demand is derived under the assumption of constant consumer tastes and preferences, which means that consumers' preferences for goods and services do not change during the analysis period. This assumption allows the relationship between the price and quantity demanded to be isolated and studied without confusion from changing consumer preferences. The law of demand states that as the price of a good increases, the quantity demanded decreases, holding constant all other factors that could influence demand.

The Law of Demand Is Derived Under the Assumption of