Multiple choice

Law of demand is based upon

  1. law of diminishing marginal utility

  2. law of diminishing return

  3. law of equi-marginal utility

  4. law of substitution
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A Correct answer
Explanation

The law of demand states that as price increases, quantity demanded decreases. This inverse relationship is derived from the law of diminishing marginal utility, which posits that each additional unit of a good provides less satisfaction than the previous one.

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