Multiple choice

Which of the following can be regarded as a law of economics?

  1. Ceteris Paribus, i.e. if the price of a commodity rises, the demanded of it will fall.

  2. Higher the income, greater is the expenditure.

  3. Taxes have no relation with the benefits which a person derives from the state.

  4. None of these
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A Correct answer
Explanation

Option A states a fundamental law of economics: the law of demand (ceteris paribus - price rises, demand falls). Laws in economics are observed regularities with causal explanations, not universal truths. Option B is not a law - expenditure doesn't always rise with income (savings exist). Option C is not a law - tax systems generally attempt to link taxes to benefits received.

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