The Reason That the Law of Demand Exists Is That

question 163

Multiple Choice

The reason that the law of demand exists is that

• A) specialization leads to an increase in a person's standard of living.
• B) people substitute cheaper products for more expensive products.
• C) people always follow the law of the land.
• D) a higher price never reduces demand enough to lower producer's profits.

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Definitions:

Long Run Cost Curve

A graphical representation that shows the minimum cost at which any given level of output can be produced in the long term, once all inputs are variable.

Expansion Path

A line that shows the combination of inputs that a firm will use to maximize output for any given level of total cost.

Isoquants

A curve representing all the combinations of factors of production that yield the same level of output.

Isocost Line

A graphical representation in economic theory showing all combinations of inputs which have the same total cost.