Answer: There is a positive relationship between price and quantity demanded. Other answers are given below.
Explanation:
• The price of a product might vary as a result of the increase or decrease in sales tax and also increase or decrease in production cost.
• The reasons why a consumer might buy more or less of a product as a result of its price are income and availability of substitutes. The income of a consumer has an impact on what an individual buys. Price has a negative relationship with quantity demanded, as price increases, quantity demanded decrease. Hence, when price increases, low income earners might move to a cheaper alternative.
Also, availability of substitutes plays a part. For example, if there's an increase in the price of pepsi, people might be tempted to move to coke if there's no price change for coke.
• There's a negative relationship between price and demand and a positive relationship between price and supply. The higher the price, the higher the supply of goods producers will like to supply while consumers will reduce their demand for a product once price increases.
• I think the economy is not in dire state. There has been an increase in employment, increase in consumption and GDP as well. The economy might not be up there yet, but we are doing well.
