The relationship between price and quantity demanded is inverse.

• A. Direct relationship
• B. No relationship
• C. Circular relationship
• D. Inverse relationship

Answer: (D)

Price and quantity demanded move in opposite directions. According to the law of demand, when the price falls, consumers buy more, and when the price rises, they buy less, all else equal. This creates a downward-sloping demand curve that reflects how price changes influence the quantity demanded. The substitution effect (cheaper goods become relatively more attractive) and the income effect (lower price increases purchasing power) help explain why demand reacts inversely to price. The other options don’t fit because a direct relationship would mean higher price increases quantity demanded, no relationship would mean price has no effect on buying, and a circular relationship doesn’t describe how price drives quantity demanded.