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

(C) a city experiences an increase in both gasoline prices and the number of people taking public transportation - firstly these things are correlated, we cannot infer causation from them if it was given that X LED/RESULTED in Y then we can think of causation but not here. Though option D and E uses these linkages correctly using "led" "results" so there causation is stated explicity.
Even if we think about causation then only will the gasoline prices only affect private transport? cannot be inferred

D - an increase in the number of computer retailers led to a decrease in the average price of computers - "retailers" v/s "buyers", if anything about demand was given like a lot of buyers are looking out for computers i.e., increase in demand then it would have been correct

E - reverse relation - price decreased quantity increased - we can use this reverse relation since all other factors are constant - I thought that what if equal overall quantity of oranges are sold regardless of the portion size. i.e., say 2 75s v/s 3 50s ? but whether the overall quantity is same or not its not relevant, since we see direct relationship in this - price decreased, quantity increased

I was confused with option C,
however how i reasoned it is,
if the option said "the automobile personal drivers" shifted to "public transport" > that would make C valid however option C doesn't mention who is now using the public transport? is it the cycle people or the pedestrians.

however, E - assuming a person spends the same amount so decreased price will increase their consumption atleast if they wanted to they can.

Now a conflicting idea that i had was, if the consumption increases doesn't the price increase keeping supply constant.
however thats a "post effect" , thats like the life cycle part 2