An explanation for a downward sloping demand curve rests on the notion of :
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Diminishing Marginal Utility
The law of diminishing marginal utility says that each extra unit of a good gives less marginal utility than the one before. So a consumer will not pay as much for each additional unit.
The consumer buys one more unit only when its price falls. A lower price thus goes with a larger quantity demanded, and the demand curve slopes downward.
NCERT (2026-27): “Derivation of Demand Curve in the Case of a Single Commodity (Law of Diminishing Marginal Utility) Cardinal utility analysis can be used to derive demand curve for a commodity.… The law of diminishing marginal utility states that each successive unit of a commodity provides lower marginal utility. Therefore the individual will not be willing to pay as much for each additional unit and this results in a downward sloping demand curve. At a price of Rs. 40 per unit x, individual’s demand for x was 5 units. The 6th unit of commodity x will be worth less than the 5th unit. The individual will be willing to buy the 6th unit only when the price drops below Rs. 40 per unit. Hence, the law of diminishing marginal utility explains why demand curves have a negative slope.…” |