In market analysis, what effect does an increase in the market price of a normal good generally have on consumer demand, ceteris paribus?
Answer and explanation
Correct answer: D. The quantity demanded decreases
- Step 1: According to the law of demand, as the price of a good rises, the quantity demanded by consumers decreases, other factors remaining equal. Answer: The quantity demanded decreases. Why not the others: Quantity demanded decreases rather than increases, supply curves reflect seller behavior rather than consumer demand, and price changes do not double consumer income.
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