Question : If a consumer's demand for a good moves in the same direction as the consumer's income, the consumer's demand for that good must be inversely related to the price of the good, which is called _____.
Option 1: law of demand
Option 2: law of supply
Option 3: law of substitute
Option 4: law of optimal choice
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Correct Answer: law of demand
Solution : The correct answer is the law of demand .
The law of demand asserts that assuming all other conditions remain constant, the quantity desired of an item or service is inversely linked to its price. This suggests that when the price of a commodity or service rises, so will the amount requested and vice versa. As a consumer's income increases, they can purchase more of the product even if the price rises. However, if the cost of the product increases too quickly, the customer can choose to buy less of it.
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