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If the price of a gallon of milk goes up, what will happen to the demand for milk?
A. The demand for milk will increase.
B. The demand for milk will decrease.
C. The demand for milk will stay the same.
D. It is impossible to say what will happen to the demand for milk.
Answer:
Answer by Student
The correct answer is (B): The demand for milk will decrease .
Detailed Explanation by Teachoo
Let’s check all the options:
-
Option (A) The demand for milk will increase
- When the price of a product goes up, the demand for it goes down, not up. This is because consumers have a limited budget and they want to buy the most satisfying products with their money. When the price of a product goes up, it becomes less affordable and less attractive compared to other products. So, this is
incorrect
.
-
Option (B) The demand for milk will decrease
- When the
price
of a
product goes up
, the
demand
for it goes
down
. This is because consumers have a limited budget and they want to buy the most satisfying products with their money. When the price of a product goes up, it becomes less affordable and less attractive compared to other products. So, this is
correct
.
-
Option (C) The demand for milk will stay the same
- When the price of a product changes, the demand for it also changes, unless the product is perfectly inelastic. Perfectly inelastic products are products that consumers need no matter what the price is, such as life-saving medicines. Milk is not a perfectly inelastic product, so its demand will change according to its price. So, this is
incorrect
.
- Option (D) It is impossible to say what will happen to the demand for milk - We can use the law of demand and the demand curve to predict what will happen to the demand for milk when its price changes. The law of demand says that when the price of a product goes up, the quantity demanded goes down, and vice versa. The demand curve shows this relationship graphically. So, this is incorrect .
