Question

Determine which reason for downward-sloping demand best explains each examples below. Drag the reason to the example to complete the problem. When a new cupcake store in your town sells giant cupcakes for $5 each, you buy one. When the store puts cupcakes on sale for $2.50, you buy two. Your favorite cereal is Frootie-Os. When it is on sale for $2 a box, you buy one. When a box of Frootie-Os is selling at its regular price of $3.50, you buy the generic store brand instead. Every Friday. you order a pizza for dinner. The first two slices are delicious, and you devour them. The third and fourth slices take you a bit longer to eat, and you do not enjoy them as much. You do not eat a fifth slice. Diminishing Substitution marginal Income effect effect utility

Answer 1

Answer:

Income effect

Substitution effect

Diminishing marginal utility

Explanation:

The demand curve in downward sloping. The demand curve shows that the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.

The income effect says that if prices fall, a consumer would be able to buy more quantities of the good as the consumer's real income rises. Conversely, if prices rise , the consumer would be able to buy less quantities of the good as the consumer's real income falls.

In the question ,when the price of cupcakes fall, the quantities purchased increases.

Substitution effect assumes that If the prices of a good falls, consumers would substituite the consumption of other goods for the good whose price fell. As a result, the quantity demanded of the good whose price falls increases. Conversely, if the price of a good rises, consumers would substituite the consumption of the good for cheaper goods.

In the question, when the price of the cereal increases, the consumer substituites the consumption of the cereal for a generic cereal.

Diminishing marginal utility states that as more and more of the quantity of a good is consumed ,the level of utility derived from the consumption of the good falls and the quantity consumed falls.

I hope my answer helps you.