Chapter 3: Problem 13

What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?

Short Answer

Expert verified

A downward-sloping demand curve represents the inverse relationship between the price of a good or service and the quantity demanded by buyers in a market. As the price increases, the quantity demanded decreases, and vice versa. This is due to the Law of Demand, which states that when the price of a good or service increases, it becomes less attractive to buyers, leading them to consume less of it or find more affordable alternatives. So, a higher price will cause buyers to demand less of the good or service.

Step by step solution

Identifying a downward-sloping demand curve

A downward-sloping demand curve represents the relationship between the price of a good or service, and the quantity demanded by buyers in a market. The curve slopes downwards from left to right, indicating that as the price decreases, the quantity demanded increases.

Understanding the relationship between price and quantity demanded

The Law of Demand states that there is an inverse relationship between the price of a good or service and the quantity demanded. This means that when the price of a good or service increases, the quantity demanded decreases and vice versa. The downward-sloping demand curve shows this relationship graphically.

Analyzing the effect of a higher price on the quantity demanded

When the price of a good or service increases, the demand curve indicates that buyers will react by demanding a lower quantity of that good or service. This is because the higher price makes the good or service less attractive to buyers, leading them to either consume less of it, or to search for more affordable alternatives.

Conclusion

A downward-sloping demand curve signifies the inverse relationship between price and quantity demanded in a market. It means that as the price of a good or service increases, buyers will respond by demanding less of it. This is because the higher price makes the good or service less attractive to consumers, who may choose to consume less or look for alternative options.

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