Sometimes, we observe cases where the price of a product rose and the quantity bought by buyers also increased. Such cases occur due to a violation of the
A) Law of Demand.
B) Law of Supply.
C) allocative eﬃciency rule.
D) ceteris paribus assumption.

Question

Quizplus · Accepted Answer

The observation of both price and quantity bought increasing contradicts the Law of Demand, which states that, ceteris paribus, as the price of a product increases, the quantity demanded decreases. However, when this doesn't hold, it's often because the ceteris paribus assumption (all other factors being held constant) is violated. Changes in factors other than the price, such as consumer preferences, income, or the prices of other goods, can lead to an increase in demand that outweighs the effect of the price increase.

Sometimes, We Observe Cases Where the Price of a Product