The demand curve is downward sloping because
A) the price must rise to induce firms to increase quantity supplied.
B) a reduction in the price of a good causes individuals to increase their purchase of that good.
C) an increase in the price will cause a leftward shift in the demand curve.
D) all of the above.

Question

Quizplus · Accepted Answer

The law of demand states that as the price of a good increases, the quantity demanded of that good will decrease. Therefore, a reduction in the price of a good will cause individuals to increase their purchase of that good. This leads to a downward sloping demand curve. Option A is incorrect because an increase in the price will not necessarily induce firms to increase quantity supplied. Option C is also incorrect because an increase in price does not cause a leftward shift in the demand curve; rather, it causes a movement along the same demand curve.

The Demand Curve Is Downward Sloping Because