How Do the Variables Price and Quantity Demanded Relate to Each

question 305

Multiple Choice

How do the variables price and quantity demanded relate to each other?

• A) Price and quantity demanded are independent of each other.
• B) Price is the dependent variable and quantity demanded is the independent variable.
• C) Price is the independent variable and quantity demanded is the dependent variable.
• D) Price and quantity demanded are both dependent variables, since both depend on the actions of buyers and sellers.

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Definitions:

Purely Competitive Industry

An industry characterized by many small firms producing identical products where no single firm can influence the market price.

Consumer Demand

The desire and willingness of consumers to purchase goods and services at given prices.

Increasing-Cost Industry

An industry in which production costs increase as output expands, often due to limited resources or rising input costs.

Decline In Demand

A situation where consumers' desire and ability to purchase a product or service decreases, often reflected in lower sales volumes.