Which statement best explains the law of demand? A. The quantity demanded by consumers increases as prices rise, then decreases as prices fall.

Which statement best explains the law of demand?

A. The quantity demanded by consumers increases as prices rise, then decreases as prices fall.

B. The quantity demanded by consumers decreases as prices rise, then increases as prices fall.

C. The quantity demanded by producers increases as prices ise, then decreases as prices fall.

D. The quantity demanded by producers decreases as prices rise, then increases as prices fall.

Answer: B. The quantity demanded by consumers decreases as prices rise, then increases as prices fall.

According to the law of demand, when everything else stays the same but the price of a good or service gets higher, the amount which consumers buy also goes down. On the contrary, the price fall leads to increase in the quantity demanded. This inverse relationship between price and quantity demanded by the consumers is one of the basic concepts in this science. It is premised on a belief that given the budgetary limitations of consumers, product price increases will prompt buyers to buy less of the good or service, while decreases in price will lead to more purchases. The law of demand is consumers’ not producers,’ and it captures the behavior of the rational person who seeks to maximize his satisfaction or utility with the given limited budget .