A consumer's demand curve for a product is downsloping because:

A) total utility falls below marginal utility as more of a product is consumed.
B) marginal utility diminishes as more of a product is consumed.
C) time becomes less valuable as more of a product is consumed.
D) the income and substitution effects precisely offset each other.

Question

Areeba Imran · Accepted Answer

Final Answer : B, Explanation :  The law of diminishing marginal utility states that as a consumer consumes more and more units of a good or service, the additional satisfaction or utility derived from each additional unit decreases, thereby causing the marginal utility curve to slope downward. This gives rise to a downward sloping demand curve because consumers are willing to purchase more of a good at lower prices, but as the price increases, the marginal utility of each unit consumed decreases, leading to a decrease in the quantity demanded. A and C are incorrect because they do not accurately explain why the demand curve slopes downward. D is incorrect because income and substitution effects are not the primary factors that determine the shape of the demand curve.

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