The demand curve for a normal good will:
A) slope downward only if the income effect dominates the substitution effect.
B) slope downward only if the substitution effect dominates the income effect.
C) slope downward.
D) slope upward if the good is also a Giffen good.

Question

Quizplus · Accepted Answer

The demand curve for a normal good will slope downward because as the price of the good decreases, consumers will buy more of it due to the income and substitution effects. This is the basic law of demand. Option A and B refer to cases where one effect dominates the other, but the demand curve will still slope downward overall. Option D refers to a rare case where the demand curve may slope upward for a Giffen good, but this is not a characteristic of a normal good.

The Demand Curve for a Normal Good Will