What Does the Law of Demand Imply

question 247

Multiple Choice

What does the law of demand imply?

• A) When price rises, quantity demanded falls.
• B) When price rises, quantity demanded rises also.
• C) When price falls, quantity supplied rises.
• D) When price falls, quantity supplied falls also.

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Definitions:

Identical Product

Goods that are exactly the same in terms of quality, size, and features, making them perfect substitutes for each other.

Economic Profit

The gap between the overall income generated and the sum of all expenses, covering both direct and indirect costs.

Total Profit

The financial gain made by a business after subtracting all expenses from its total revenues.

Perfect Competitor

A hypothetical market structure where many firms sell an identical product, entry and exit are free, all information is known to all parties, and no single buyer or seller can influence the market price.