Which of the following is not held constant when a demand schedule is drawn up ?

Question

Accepted Answer

The correct option is 4:
The purpose of a demand schedule (and the resulting demand curve) is to isolate the relationship between a good's price and the quantity demanded of that good. This core concept is founded on the fundamental economic principle of *ceteris paribus*, a Latin phrase meaning "all other things being held constant." Therefore, when economists draw a demand schedule, the only factor allowed to vary is the price of the specific good in question ("That good's price"). By changing only the price and observing the resulting quantity demanded, we can accurately chart the inverse relationship described by the Law of Demand. If any other factor were to change simultaneously, it would cause a shift in the entire demand curve, making it impossible to determine the pure effect of the price change.

The incorrect option is 1: The price of complementary goods.
The price of complementary goods must be held constant (*ceteris paribus*) because a change in their price causes the entire demand curve to shift. For instance, if the price of gasoline (a complement to cars) increases, the demand for cars would shift left, demonstrating a change in demand, not a movement along the schedule.

The incorrect option is 2: The price of substitutes.
Similar to complements, the price of substitutes must be held constant. If the price of a substitute good (like coffee compared to tea) changes, it will alter consumer choice, causing the demand curve for the original good to shift, which violates the *ceteris paribus* condition necessary for drawing a single demand schedule.

The incorrect option is 3: Consumer's income.
A consumer's income is a major determinant of demand. If income changes, the purchasing power of consumers changes, leading to an increase or decrease in demand for normal goods (a shift in the demand curve). Therefore, to map the relationship between price and quantity demanded on a fixed schedule, income must be kept constant.