Question

The Law of Demand states the relationship between the demand for a good and that good's price. Which of the following statements summarize this relationship?

Choose one or more: A. Demand curves for Giffen goods could be upward sloping or downward sloping. B. Demand curves for normal goods are always upward sloping. C. Demand curves for normal goods are always downward sloping. D. Demand curves for inferior goods could be upward sloping or downward sloping. E. Demand curves for Giffen goods are always downward sloping. F. Demand curves for normal goods could be upward sloping or downward sloping. G. Demand curves are upward sloping in all cases. H. Demand curves for Giffen goods are always upward sloping. I. Demand curves are downward sloping in all cases. J. Demand curves for inferior goods are always downward sloping.

Answer 1

Law of demand states that there is inverse relationship between the price of the commodity and its price.

A Demand curve for giffen goods is upward sloping hence this statement is wrong.

B Demand curve for normal goods is inverse as per law of demand hence not correct.

C This correctly summarised the relationship

D Demand curve for inferior good is upward sloping which is exception to law of demand hence do not capture law of demand relationship.

E Even this statement correctly presents the inverse relationship between price and demand however demand curve for giffen goods is upward sloping hence it's not correct.

F Demand curve for normal goods is downward sloping hence statement is not correct

G Not presents the law of demand inverse relationship

H This statement is correct, however it is exception to law of demand. Hence this statement is wrong.

I This statement is correct as it presents the inverse relationship between price and demand.

J Incorrect, it is upward sloping.

Hence statement C & H correctly summarised the relationship.

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