According to the Law of Demand, what happens when prices rise?

The Law of Demand states that, all other factors being equal, as the price of a good or service rises, the quantity demanded by consumers typically decreases. This relationship is based on the principle of substitution and the income effect. When prices increase, consumers may feel less inclined to purchase the same quantity of the good because they may seek alternatives that are more affordable (substitution effect), or they may reduce their overall spending due to the decreased purchasing power (income effect). Hence, the quantity demanded tends to move inversely to the price; as the price rises, consumers will usually buy less of that good.

This principle is fundamental in understanding consumer behavior in microeconomics, making the correct answer the choice that states that quantity demanded decreases when prices rise.