Question

At lower commodity prices more of the commodity will be purchased in the market because of _________.

• A. more consumers buy the commodity at lower prices than at higher prices
• B. consumers substitute this commodity for others in consumption
• C. at lower prices, consumers purchase more of the commodity with given money income
• D. all of the above

Answer 1

The correct option is D all of the above

Law of demand states that at lower commodity prices more of the commodity will be purchased in the market because of the following reasons:a) more consumers buy the commodity at lower prices than at higher prices

b) Substitution effect: consumers substitute this commodity for others in consumption

c) Income effect: at lower prices, consumers purchase more of the commodity with given money income