A functional relationship is given as follows: Q N = f (P N ) Where Q N stands for quantity demanded of commodity-N and P N stands for the price of commodity-N. The law of demand states that other variables remain consta

CS CSEET · Business Economics & Fundamentals of Accounting and Auditing · PYQS · December 2013
A functional relationship is given as follows: Q N = f (P N ) Where Q N stands for quantity demanded of commodity-N and P N stands for the price of commodity-N. The law of demand states that other variables remain constant, there is an inverse relationship between price of a commodity and its quantity demanded. It means that if —
(A) The price of a commodity goes up, quantity demanded of its substitute will fall
(B) The demand for a commodity goes up, its price will also go up
(C) The price of a commodity falls, its quantity demanded will rise
(D) None of the above.

Answer & Explanation:

Correct Answer: Option (C)

Correct answer: (C) The price of a commodity falls, its quantity demanded will rise.

Topics: Business Economics

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