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    Question

    The law of demand states

    that:
    A As income increases, demand falls Correct Answer Incorrect Answer
    B As supply increases, demand increases Correct Answer Incorrect Answer
    C As price increases, demand decreases Correct Answer Incorrect Answer
    D As price decreases, demand decreases Correct Answer Incorrect Answer
    E Demand is unaffected by price Correct Answer Incorrect Answer

    Solution

    The Law of Demand: Other things being equal, the quantity demanded of a commodity varies inversely with its price.  Graphically, the demand curve slopes downward. Exceptions: Giffen goods, Veblen goods, and necessities where demand may not fall with price.

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