When quantity demanded decreases in response to a change in price:
options:
1) the demand curve shifts to the right.
2) the demand curve shifts to the left.
3) there is a movement down along the demand curve.
4) there is a movement up along the demand curve.
The correct answer and explanation is:
The correct answer is 4) there is a movement up along the demand curve.
When the price of a good or service increases, the quantity demanded typically decreases. This relationship is explained by the law of demand, which states that, all else being equal, as the price of a good rises, the quantity demanded for that good falls, and as the price falls, the quantity demanded rises.
The demand curve itself represents the relationship between the price of a good and the quantity demanded. The curve is generally downward sloping, reflecting the inverse relationship between price and quantity demanded. A movement along the demand curve occurs when there is a change in the price of the good, but no other factors influencing demand change.
In the case where the quantity demanded decreases due to a price increase, the movement is up along the demand curve. This is because, with a higher price, consumers will demand less of the good, leading to a movement upward along the curve, showing a decrease in quantity demanded at the higher price level.
It is important to note that this is different from a shift in the demand curve. A shift in the demand curve occurs when factors other than price, such as income levels, consumer preferences, or the prices of related goods, change. A rightward shift in the demand curve indicates an increase in demand (more is demanded at every price), and a leftward shift indicates a decrease in demand (less is demanded at every price).
In summary, when quantity demanded decreases as a result of a price increase, the movement is up along the demand curve rather than a shift in the curve itself.