Which of the following is the relation that the law of demand defines?

Question

Which of the following is the relation that the law of demand defines?

1. A. Income and price of a commodity
2. B. Price and quantity of a commodity (Correct answer)
3. C. Income and quantity demanded
4. D. Quantity demanded and quantity supplied

Correct Answer

Option B — Price and quantity of a commodity

Detailed Solution & Explanation

The correct answer is Price and quantity of a commodity.

Key Points

• The Law of Demand defines the inverse relationship between the price of a commodity and the quantity demanded — when price rises, quantity demanded falls, ceteris paribus.

Additional Information

• The law of demand states that, other things equal, quantity demanded varies inversely with price — giving a downward-sloping demand curve.
• The phrase *ceteris paribus* matters: income, tastes, and the prices of related goods are held constant.
• Exceptions: Giffen goods (inferior goods with a strong income effect), Veblen goods (status purchases), and expectations of further price rises.
• Distinguish a movement along the curve, caused by the good's own price, from a shift of the curve, caused by anything else.