Question: Critically evaluate: In comparing the two equilibrium positions in the figure below, I note that a smaller amount is actually demanded at a lower

Critically evaluate:

"

In comparing the two equilibrium positions in the figure below, I note that a smaller amount is actually demanded at a lower price. This observation refutes the law of demand."

A graph plots price versus decrease in demand.In the graph, the horizontal axis is labeled Decrease in demand and the vertical axis is labeled Price. The graph shows two falling curves labeled D subscript

1

and D subscript

2

and a rising curve labeled S

.

D subscript

1

and D subscript

2

start from top left and end at bottom right and S starts from bottom left and ends at top right. D subscript

1

intersects S at point A and D subscript

2

intersects S at point B

.

A leftward arrow is marked between D subscript

1

and D subscript

2 .

A decrease in demand from D

1

to D

2

results in a

.

This causes the price to

.

This change in price results in in quantity demanded along demand curve D

2 .

This change in price results in in quantity supplied.

The new equilibrium has a and when compared to the original equilibrium.

Does this refute the law of demand:

.

Why:

.

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