Describe what is revealed through the law of demand. Explain what the law of demand fails to reveal about the quantity demanded.

Sample Response:

The law of demand reveals that a change in price will change the quantity demanded. It also reveals the direction of the change. If prices increase then demand will decrease, and if prices increase then demand will decrease. What the law of demand fails to show is to what extent the quantity will change. The law of demand is not able to reveal whether price changes will affect demand a little or a lot.

Describe what is revealed through the law of demand:

The law of demand is one of the most fundamental concepts in economics. It works with the law of supply to explain how market economies allocate resources and determine the prices of goods and services that we observe in everyday transactions.

Explain what the law of demand fails to reveal about the quantity demanded:

The law of demand states that quantity purchased varies inversely with price. In other words, the higher the price, the lower the quantity demanded. This occurs because of diminishing marginal utility.