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Causes of Downward Slope

A

Following the law of demand, the downward slope signifies that following a decrease in the price or utility of a commodity, the demand for the commodity increases. However, this depends on the purchasing power of the consumer.

The downward slope is caused by:

  1. A fall in the price of a commodity. When there is a decrease in the price of a commodity, the demand for the commodity increases, this may be due to an overabundance of a commodity in the market.

  2. Substitution. When a cheaper substitute of a commodity becomes available for consumers, they tend to respond positively towards the substitute and negatively towards the original product. This results in a downward slope of the demand curve for the original commodity.

  3. The law of diminishing utility. The more of a commodity a consumer consumes, the less valuable it becomes, and the less likely they are to buy it.

7 months ago
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