Question

A demand curve is downward sloping because as the price of a good falls, demanders will substitute away from other goods whose relative prices have now risen. T/F

Answer 1

Answer:

True

Explanation:

Many reasons can be adduced for the downward sloping nature of the demand curve. As stated in the question, for two or more goods that are substitutes, if the price of one falls relative to the other, demand in likely to shift in favour of the good whose price has fallen. Demanders are assumed to be rational and would consume the less expensive item between two goods, all other things remaining equal.