Which of the following contribute to the downward slope of a demand curve? A. In

Question

Which of the following contribute to the downward slope of a demand curve? A. Income and substitution effects. B. The cross elasticities of alternating indifference curves. C. Decreasing marginal utility of consumption. D. A & C Which of the following contribute to the downward slope of a demand curve? Which of the following contribute to the downward slope of a demand curve? Income and substitution effects. The cross elasticities of alternating indifference curves. Decreasing marginal utility of consumption. A & C A. Income and substitution effects. B. The cross elasticities of alternating indifference curves. C. Decreasing marginal utility of consumption. D. A & C

Explanation / Answer

The answer is D) both A & C

A because,

Income effect. Other things being equal, when the price of a commodity decreases, the real income or the purchasing power of the household increases. The consumer is now in a position to. purchase more commodities with the same income. The demand for a commodity thus increases not only from the existing buyers but also from the new buyers who were earlier unable to purchase at higher price. When at a lower price, there is a greater demand for a commodity by the households

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