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Business Studies

What Can Be Marketed?

The functiona...

Question

The functional relationship between income and consumption expenditure is explained by the _________.

A

consumer's surplus

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B

law of demand

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C

law of supply

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D

Keynes's psychological law of consumption

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Solution

The correct option is B law of demand
Law of demand states that when price increases, the demand for the commodity falls and when price decreases, the demand for the commodity rises.The functional relationship between income and consumption expenditure is explained by the law of demand.The demand curve shows that price and quantity demanded are inversely proportional and also inversely related.

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