Asked by Jibreel Ahmad on Apr 25, 2024

verifed

Verified

A downward-sloping demand curve can be derived for a normal product by increasing its price in the consumer-behavior model and noting

A) the increase in the utility-maximizing quantity of that product demanded.
B) the decrease in the utility-maximizing quantity of that product demanded.
C) a substitution effect that encourages more consumption of that product.
D) an income effect that encourages more consumption of that product.

Utility-maximizing

The economic principle whereby consumers adjust their consumption of goods and services to achieve the highest level of satisfaction or utility.

Downward-sloping

Downward-sloping describes a curve or line on a graph that exhibits a decline from left to right, often used to illustrate decreasing prices or quantities in economics.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at various prices, typically downward sloping.

  • Understand the effect of price fluctuations on the demand quantity as influenced by the principle of diminishing marginal utility.
verifed

Verified Answer

MP
Mrugesh Patel8 days ago
Final Answer :
B
Explanation :
When the price of a normal product increases, the utility-maximizing quantity of that product demanded decreases, reflecting the downward slope of the demand curve. This is because consumers will buy less of the product as it becomes more expensive, assuming their preferences and income remain constant.