Which of these is a reason the demand curve slopes downward?

When a good becomes cheaper, its quality fallsCorrect answerYour answerWhen a good becomes cheaper, sellers supply moreCorrect answerYour answerWhen a good becomes cheaper, buyers switch to it from its substitutesCorrect answerYour answerWhen a good becomes cheaper, incomes fallCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

A lower price makes the good cheaper relative to its substitutes, so buyers substitute towards it: the substitution effect.
A lower price also raises real income (income effect) and, with diminishing MU, a lower price justifies more units.

Worth noting

Sellers supplying more is the law of supply, not a reason for the demand curve's slope.

Concept: Substitution effect
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe demand schedule, curve and law

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Ten questions from Demand & Its Determinants, at your own pace.

Which of these is a reason the demand curve slopes downward?

Explanation