The correct answer is: A. future expectation
The inverse relationship between variations in the prices and quantity demanded is due to the substitution effect and the income effect. The substitution effect states that when the price of a good decreases, consumers will substitute that good for other goods that are now relatively more expensive. The income effect states that when the price of a good decreases, consumers will have more money to spend on other goods.
Future expectation is not a factor that affects the inverse relationship between variations in the prices and quantity demanded. Consumers do not take into account future expectations when they make purchasing decisions. They only consider the current price of a good and their current income.
Here is a more detailed explanation of each option:
- A. Future expectation: This is not a factor that affects the inverse relationship between variations in the prices and quantity demanded. Consumers do not take into account future expectations when they make purchasing decisions. They only consider the current price of a good and their current income.
- B. Income effect: The income effect states that when the price of a good decreases, consumers will have more money to spend on other goods. This is because the decrease in the price of the good will increase their real income.
- C. Substitution effect: The substitution effect states that when the price of a good decreases, consumers will substitute that good for other goods that are now relatively more expensive. This is because the decrease in the price of the good will make it relatively cheaper than other goods.
- D. Law of diminishing marginal utility: The law of diminishing marginal utility states that as consumers consume more of a good, the marginal utility they receive from consuming that good decreases. This means that the more of a good a consumer has, the less satisfaction they will get from consuming an additional unit of that good.
I hope this helps!