How does the diminish marginal utility and price of superior goods determine negative slope in demand curve?

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1146563

2026-04-18 23:20

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1. because of substitution effects: When the price of a commodity falls, it become relatively cheaper than other commodities. This induces the consumer to substitute the commodity whose the price has fallen for other commodities, which have now become relatively expensive

2. Income Effect: When the price of the commodity falls, consumers can buy more quantity of commodities with the given income as a result of a fall in the price of that commodity

3. Number of consumers: When more numbers of consumers start buying the commodity, because some of them previously was not afford to buy it.

4. Various use of that commodity

5. Law of diminishing marginal utility

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