The ʺLaw of Demandʺ Predicts That, Other Things Being Equal

question 291

Multiple Choice

The ʺlaw of demandʺ predicts that, other things being equal,

• A) an increase in the price of pizza decreases the quantity of pizza demanded.
• B) an increase in the price of coffee decreases the quantity of tea demanded.
• C) an increase in the price of downloaded music decreases the demand for downloaded music.
• D) a decrease in the price of gasoline decreases the quantity of gasoline demanded.

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Definitions:

Consumption Spending

The total amount of money spent by households and individuals on goods and services within a specific time period.

Marginal Propensity

A measure of how much an individual's consumption changes with a change in income.

Disposable Income

The cash reserves left for households to spend and save after paying income taxes.

Disposable Income

Funds households have for saving and spending following the deduction of income taxes.