What happens to quantity demanded when price is raised? (LO3) a) It rises. b) It falls. c) It stays the same. d) It cannot be determined if it rises, falls, or stays the same.

In order to solve this problem, we need to understand the principle of demand which states that as the price of a product increases, the quantity demanded of that product decreases and vice versa. This happens because when the price of a product is high, consumers buy less of that product, and when the price decreases, consumers are willing to buy more of it. This relationship between price and quantity demanded is called the law of demand.

Now that we understand the relationship between price and quantity demanded, we can analyze each of the options: a) It rises. - This option contradicts the law of demand as it suggests that the quantity demanded increases with an increase in price which is not correct. b) It falls. - This option aligns with the law of demand, stating that the quantity demanded decreases as the price increases. c) It stays the same. - This option also contradicts the law of demand as it suggests that there is no relationship between price and quantity demanded. d) It cannot be determined if it rises, falls, or stays the same. - This option does not acknowledge the law of demand and is not a proper conclusion based on the relationship of price and quantity demanded.

Based on our analysis, we can determine that option b) 'It falls' is the correct answer. As the price is raised, the quantity demanded decreases, in accordance with the law of demand.