A consumer's demand curve
A)shows the quantity of a good or service that individual will demand at each different price
B)shows the quantity of a good or service that individual will demand at different levels of income
C)is derived by equating the income and substitution effects
D)slopes downward because the income effect offsets the substitution effect
E)will be vertical if the income effect outweighs the substitution effect

Question

Quizplus · Accepted Answer

A consumer's demand curve shows the quantity of a good or service that individual will demand at each different price. It is not necessarily based on income or the balance between income and substitution effects. The typical demand curve slopes downward because as price increases, the quantity demanded decreases, which reflects the substitution effect.

A Consumer's Demand Curve