Last year the price of corn was $3 a bushel and the quantity of corn demanded was 10 million bushels. This year the price of corn was $4.00 a bushel and the quantity demanded was 9 million bushels. Is this evidence that law of demand does not apply to corn?

Question

Quizplus · Accepted Answer

The law of demand states that, all else being equal, as the price of a good increases, the quantity demanded decreases. The decrease in quantity demanded from 10 million to 9 million bushels as the price increased from $3 to $4 is consistent with the law of demand. The other-things-equal assumption may have been violated, affecting demand.

Last Year the Price of Corn Was $3 a Bushel