The Law of Demand Refers to How

question 115

Multiple Choice

The law of demand refers to how

• A) the price of the good changes when people's demand for the good changes.
• B) demand changes when people's incomes change.
• C) the quantity demanded changes when the demand for the good changes.
• D) the quantity demanded changes when the price of the good changes.
• E) demand changes when the prices of substitutes and complements change.

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Definitions:

Quota Limit

A government-imposed trade restriction limiting the number or value of goods that can be imported or exported during a specified time frame.

Price Ceiling

A price ceiling is a government-imposed limit on how high a price is charged for a product, with the aim of ensuring affordability by limiting how much prices can increase.

Quota Rent

The economic rent received by the holder of a production or import quota, which can be realized by selling the product at a higher price than the world price due to the quota limitation.

Taxi Medallion

A licensure medallion required for a taxi to operate legally in many cities, often representing a significant cost for taxi drivers and companies.