To derive the law of demand, we assume that
A) prices are constant.
B) real prices are constant.
C) marginal utility is constant.
D) tastes are constant.

Question

Quizplus · Accepted Answer

The law of demand states that as price increases, quantity demanded decreases, assuming all other factors remain constant. Therefore, to derive this law, we must assume that tastes (or consumers' preferences) remain constant. If tastes were to change, then the relationship between price and quantity demanded would also change, making it difficult to derive a consistent law of demand.

To Derive the Law of Demand, We Assume That