Why does a demand curve slope downward
Why does a demand curve slope downward?
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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.
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