--%>
Assignment Help - homework help

Why does a demand curve slope downward

Why does a demand curve slope downward?

E

Expert

Verified

The demand curve slopes downward because of the substitution and income effects.  As price of a product reduces relative to that of replacements, a buyer will substitute the now cheaper commodity for those whose prices have not changed.  At the same time, the decreased price of the commodity under discussion will make the buyer wealthier in real terms.  More can be bought of this commodity (as well as of others whose prices have not changed).  Accordingly, replacement and income effects reinforce each other: More will be bought of a normal (or superior) commodity as its price decreases.

   Related Questions in Business Economics

  • Q : Who is a normal resident Normal

    Normal resident: The persons or an institution who lives in a country and whose centre of interest lies in that country is termed as a normal resident of that country.

    		•
  • Q : Specialization in division of labor I

    I have a problem in economics on Specialization in division of labor. Please help me in the following question. Jennifer writing computer code whereas Melissa handles the business features of Econo-Software would be an illustration of specialization i

    		•
  • Q : Market system & a command economy try

    Contrast how a market system and a command economy try to cope with economic scarcity?

    		•
  • Q : Question 7 Question 7: You are given

    Question 7: You are given the following data about two firms: FIRM A Quantity 0 1 2 3 4 5 6 Total revenue ($) 0 10 20 30 40 50 60 Average revenue ($) ___ ___ ___ ___ ___ ___ ___ Marginal revenue ($) ___ ___ ___ ___ ___ ___ Total cost ($) 30 42 50 60 76 100 14

    		•
  • Q : Introduction of the term combined

    Give a brief introduction of the term combined leverage? And in what manner it is calculated?

    		•
  • Q : Explain Self-interest of the Market

    Explain Self-interest of the Market System?

    		•
  • Q : Illustrate the supply curve and also

    Illustrate the supply curve and also determinants of supply?

    		•
  • Q : Explain the behavior of the workers Use

    Use the economic perspective to explain the behavior of the workers?  Why do they work so diligently?

  • Q : Parking meters may yield little or no

    Explain: “Even though parking meters may yield little or no net revenue, because of the rationing function they perform nevertheless be retained”

    		•
  • Q : Main advantage of EVA The main

    The main advantage of using EVA is that it is simple to calculate and understand. It uses simple measures like operating profits and cost of capital terms which are widely known and accepted in the financial arena. It helps the managers to assess thei

    		•