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CMA Foundation · Fundamentals of Business Economics and Management · The Fundamentals of Economics

A consumer's demand schedule shows 20 units at ₹10 and 30 units at ₹8 per unit, other things equal. Which statement about this schedule is correct?

The schedule is consistent with the law of demand, because quantity demanded rises from 20 to 30 units when price falls from ₹10 to ₹8. The relationship between price and quantity is inverse, so the demand curve slopes downward and no Giffen behaviour appears.

  1. AIt is consistent with the law of demand because quantity rises when price fallsCorrect
  2. BIt violates the law of demand because total spending changes
  3. CIt shows an increase in demand because quantity demanded rose
  4. DIt shows a Giffen good because the demand curve slopes upward

Explanation

Price fell from ₹10 to ₹8 and quantity rose from 20 to 30, an inverse relationship, which is the law of demand. Spending changing from ₹200 to ₹240 is irrelevant to the law. A rise in quantity due to own-price change is an extension, not an increase in demand.

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