Question

One reason that the quantity demanded of a good increases when its price falls is that...

One reason that the quantity demanded of a good increases when its price falls is that the

A. price decline shifts the supply curve to the left.

B. lower price increases the real incomes of buyers, enabling them to buy more.

C. lower price shifts the demand curve to the left.

D. lower price shifts the demand curve to the right.

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Answer #1

Option B ( lower price increases the real incomes of buyers, enabling them to buy more)

Explanation-

Given the fixed income, when the price of the good decreases it will lead to increase in the demand for the good because the with the fall in prices, the real income of buyers increases which enables them to buy more. Shifts in demand curve takes places with the changes in income, change in taste and preferences and change in price of substitute/complement goods etc.

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