The average demand curve slopes downward due to all of the following EXCEPT
A) the law of increasing relative costs.
B) the laws of diminishing marginal utility.
C) the real-income effect.
D) the principle of substitution.

Question

Quizplus · Accepted Answer

The average demand curve does not slope downward due to the law of increasing relative costs. This law explains that as the price of a good increases, consumers may choose to substitute it with a cheaper alternative, but it does not directly affect the slope of the demand curve. The downward slope of the demand curve is primarily due to the laws of diminishing marginal utility, real-income effect, and principle of substitution.

The Average Demand Curve Slopes Downward Due to All of the Following