Question

“The Law of Demand states other things being equal, the quantity demanded of a commodity increases when its price falls and decreases when its price rises. There are several assumptions of the Law of Demand.”
Which of the following is an assumption of the Law of Demand?

[1 mark]

• A. Price remains constant.
• B. Prices of substitute goods remain constant
• C. Demand remains constant
• D. The consumer must consume standard goods

Answer 1

The correct option is B Prices of substitute goods remain constant

The assumptions of the Law of Demand:

• Price of related goods remains constant
• Income of the consumer remains constant
• Taste and preferences of the consumer remain constant