Why does the demand curve slope downward?

Why does the demand curve slope downward?

• A. Because as price falls, quantity demanded increases (inverse relationship)
• B. Because higher prices always raise demand
• C. Because consumers save money when prices rise
• D. Because buyers lose purchasing power

Answer: (A)

The demand curve slopes downward because of the law of demand: price and quantity demanded move in opposite directions. When price falls, consumers can afford more or switch to the good from more expensive substitutes, so quantity demanded rises. This inverse relationship—lower price leads to higher quantity demanded—is what creates the downward slope. That’s why the best explanation is the statement that as price falls, quantity demanded increases. The other options don’t fit: higher prices do not increase demand; saving money isn’t the mechanism for why demand responds to price changes; and although purchasing power is related to why people buy less when prices rise, the core reason the curve slopes downward is this inverse relationship between price and quantity demanded.

The demand curve slopes downward because of the law of demand: price and quantity demanded move in opposite directions. When price falls, consumers can afford more or switch to the good from more expensive substitutes, so quantity demanded rises. This inverse relationship—lower price leads to higher quantity demanded—is what creates the downward slope.

That’s why the best explanation is the statement that as price falls, quantity demanded increases. The other options don’t fit: higher prices do not increase demand; saving money isn’t the mechanism for why demand responds to price changes; and although purchasing power is related to why people buy less when prices rise, the core reason the curve slopes downward is this inverse relationship between price and quantity demanded.