Question

The rent forâ 2-bedroom apartments in Detroit has fallen from an average ofâ $796 in September 2014 toâ $717 in March 2015. Demand forâ 2-bedroom apartments in Detroit was falling during this period as well. This is hard to explain because the law of demand says that lower prices should lead to higher demand. Do you agree or dis-agree with thisâ statement?

A. Agree. This is hard to explain because a rise in prices should result in a higher quantity demanded.
B. Agree. This is hard to explain because a fall in prices should result in a higher quantity demanded.
C. Dis-agree. A rightward shift of the demand curve would result in a lower price and a lower quantity demanded.
D. Dis-agree. A leftward shift of the demand curve would result in a lower price and a lower quantity demanded.

Answer 1

Answer and Explanation:

A. Agree. This is hard to explain because a rise in prices should result in a higher quantity demanded.