Question

Select all the correct answers. Which statements are true according to the law of demand?

1. An increase in supply leads to an increase in demand.

2. A decrease in supply leads to a decrease in demand.

3. An increase in price leads to a decrease in quantity demanded.

4. A decrease in price leads to an increase in quantity demanded.

5. An increase in price leads to an increase in demand.

Answer 1

The correct statements are:

1. An increase in price leads to a decrease in quantity demanded.
2. A decrease in price leads to an increase in quantity demanded.

Explanation:

According to Law of supply & demand:

• There is an inverse relationship between the price & quantity demanded.
• There is an direct relationship between the price & quantity supplied.