Table 4-1

Question

Price

(Dollars per unit)


Quantity Demanded

(Units)
10 100
20 Q1

Refer to Table 4-1. If the law of demand applies to this good, then Q1 could be
a. 400.
b. 100.
c. 0.
d. 200.

Answer 1

The law of demand states that, all else being equal, as the price of a good increases, the quantity demanded decreases, and vice versa.

In Table 4-1, we can see that at a price of $10, the quantity demanded is 100 units. If the price rises to $20, we would expect the quantity demanded, \(Q1\), to be lower than 100 units.

Given the options provided:

a. 400 - Too high, contradicts the law of demand. b. 100 - No decrease in quantity demanded, contradicts the law of demand. c. 0 - This is a possibility since a higher price could potentially lead to no demand. d. 200 - Too high, contradicts the law of demand.

Thus, the only option that is consistent with the law of demand is:

c. 0.