The law of demand states that, if all other factors remain equal, the

Surprised! What's wrong with C?

Trend Increase in price, Decrease in demand. Only relation is Price to Demand.
Invalid relation is reverse relations, that is demand to price.

POE.
A) Company A has a monopoly over the widget market so an increase in widget
prices has little effect on the quantity demanded
Incorrect - It does not follow trend

(B) a manufacturer of luxury cars noticed that its customer base is relatively
unresponsive to changes in price
Incorrect - It does not follow trend

(C) a city experiences an increase in both gasoline prices and the number of
people taking public transportation
Its seems to follow the trend. Let's Keep it aside till last option.


(D) an increase in the number of computer retailers led to a decrease in the
average price of computers
Relation of supply to Cost has not been discussed.

(E) a reduction in the price of oranges from $2 per pound to $1 per pound results
in 75 pounds of oranges being sold as opposed to 50 pounds[/quote]
It follows the trend of price and demand.

Only Option C and E seems to correct, Lets find the better.

In option C, Price of Gasoline Increase -> Public transport Increase.
it depends on leap pf faith (in general this relation may be true, but not discussed in passage)

In option E Relationship is directly illustrated. Hence Option E is better than Option C

The argument says that Higher the price = Lower the quantity demanded. So, how can we assume that Lower the price = Higher the quantity demanded would be the right choice for this question?
Even though they are related, how can one assume that the reverse logic would hold good?
Experts please help.
Thank you,
Jat

The argument is talking about the negative effect of price on the quantity of goods purchased.

(C) a city experiences an increase in both gasoline prices and the number of people taking public transportation => High gasoline prices & high number of people taking public transportation, this doesn't indicate that people decrease private transport and change to use public transport, the relationship of price & quantity of good is so vague.
(E) clearly indicates that when the price decline from $2 to $1 => the quantity of orange purchased increases from 50 punds to 75 pounds.. Hence E

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